1024x768 is the best. It is just a happy medium between people that are still using those old 17" CRT monitors and those using the new widescreen LCD's. The city I work for does the same.
I like to make my sites' main content have a width of 960 and then center the content with margin-left and margin-right set to auto.
IMHO using dynamic widths is stupid; sometimes it works but ends up being more of a pain (just like watermarks) in the end.
