Higher screen resolution != smaller icons or smaller text. All you need to do is to config the icons and text so it gets bigger.
Higher screen resolution == clearer screen (well, that and response time and frequency
), fully support for higher res wallpapers and icons. I run it at 1280x1024 which is the max my crappy graphic card can do. Ive tried emulating it to 2000something x something, but seems kinda pointless, cause my computer probably wouldn't be able to handle that kind of wallpapers (pluss resolution emulating sucks donkey's willy wonka)
In KDE, and most likely in GNOME aswell (haven't really tried), when you crack up the res icons and stuff will be automatically resized to look the same, just smooooth
Though im more of a console person when it comes to linux and doesn't really use any X GUI at all.
(except for BlackBox sometimes, for solitaire when im bored)