There is a disturbing tendency for web pages to get larger and larger. What seems to be happening is that web designers are believing the statistics that say that most people now are buying larger screens. Yes, that is probably true, but it is not the point.
I haven’t bought a 19″ screen to view your web site full size and hitting me in the face. I multi-task, even if women say that men can’t! I want multiple windows open on my screen. In 19″ I can get two good sized windows open and three or four little ones like IM rostas. I can keep my mail box open while I am browsing. I can make notes from web pages. I can refer to one web page whilst viewing another. If you make your web site so it only works when the screen is full width then you are stopping me doing any of those things.
The rule of thumb should still be: Make sure your web pages work on a window 800 x 600 pixels; and that space must include the browser furniture like scroll-bar, toolbar, status-bar etc. Better still, make it dynamic so that it expands to fill the available space. The width is important to the users because there is nothing worse than horizontal scrolling. It is clumsy and difficult to use and quite often users will not notice that there is content off to the right. The height is important to you, the designer. Users are quite used to vertical scrolling but unless your page makes an impact in the bit that is visible at the top then they may not bother to look any further.
I am not saying that there should be no limits; if your page becomes ugly or just looks daft above or below certain widths then feel free to restrict them but aim for allowing any width between about 600 and 1000 with the optimum at 800 and you won’t go far wrong.