I am running the demo image and have used 640x480, 800x600, and 1024x768.
I have not touched xorg.conf yet.
The bootargs for setting the video mode change depending on the version
of DSS that is being used.
When I first got my demo image it was omapfb.video_mode=800x600MR-16@60.
That was with a 2.6.28 kernel. When I updated my kernel to 2.6.29 I had
to change it to omapfb.mode=dvi:800x600MR-16@60
I am using an SGI 1600SW monitor that has a native resolution of 1600x1024
but it has not given me any problems with the resolution I have used.