My personaly preference is to use the highest resolution I can stand. I'm a
little weird, my eyeballs can stand as low as 65Hz refresh reate for
extended periods, especially if my background is not pure white.
The advantage of higher resolution is that you simply have more room on
screen. I can see more in the FMT, and I can see more in the graphics area.
When rebuilding a computer, the default 800 x 600 actually brings on a
claustraphobic sensation.
There is something to be said for balancing resolution against video card
speed. If you find that your video card cannot cope in a satisfactory way
with the workload, a lower resolution can help it.
Display resolution is not set in stone. You don't even need to reboot
windows (amazing...) to change it. Try it out and see what works for you.