a website should be able to be view in all screen resolutions. not everyone has a big monitor. some people i know still use 14 inch monitors.

But its tougher to get good design and flexibility with resolution supporting all monitors.

Here's a statistic from one of my sites, but I can tell you that is about the same from all my other sites:
1024x768 (45.9%)
1280x800 (12.3%)
800x600 (10.4%)
1280x1024 (9.7%)
1152x864 (3.2%)
1280x768 (2.2%)
1680x1050 (1.9%)
1400x1050 (0.5%)
1280x960 (0.7%)
Others (13.2%)

As you can see, most of the users are on 1024x768 px; there is still some important percent of people using 800x600; as for the lower or higher resolutions, you can see they are very few.
I think fixed width sites or fluid inside some limits are the best options.
If you use CSS for the layout (the reccomended way to do it), fixed width site layouts are easyer to control and make compatible with more browsers than fluid designs.

Fluid design with a minimum and a maximum width (for instance min. 760px width - for 800x600 - and max. 960px width - for 1024x768) are also a good alternative, although it is more difficult to make compatible with different browsers (IE for instance).

The fluid layout is good as it adjusts to many different resolutions, but I think it has two very big drawbacks:
- is hard to keep the layout tha way you want on different screen resolutions (this may not be a problem if you have a simple, Google like layout)
- on big resolutions, your content spreads too much, being very hard to read

i have made many different types of websites. the one i am working on (http://www.banditssoftball.org/webdesrev/) now is a fixed width container in the middle of the screen. it works with almost every resolution but it has it's problems. another i have built is (http://www.vcgames.net/biddy/) and it works with all resolutions and all browsers. they both were made in notepad and not some fancy webdesign program and were relatively easy to do, especially if you are good with css.

Why do more people use 1280x800 than 1280x1024? 1280x1024 is a "common" resoltution whereas 1280x800 is widescreen?

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