I couldn’t get used to 1280x1024 on a 19", jumped straight to 1600x1200… although I have two 17" monitors set up here (1280x1024) at work side by side, great setup for both graphic design and coding.
I think 1024 x 768 is the best for designing because you’ll always remember what resolutions to use for other peoples resolutions. You have a good restriction when designing and it also doesn’t limit you.
And also - you’ll be able to view most sites at a great size. If your monitor is too big, sometimes sites tend to look way too small :).
I have a 21" monitor at 1600x1200 coupled with another 21" monitor running 1280x1024 (on the same machine). I love it. I wish that my second monitor supported 1600x1200 at a decent refresh rate though.
I’d say the bigger the resolution and size the better. I love being able to see tons of my code/design work at one time, and when in photoshop or flash, I have my panels all on one monitor and my workspace clear so I can see what I’m doing :).
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