That's probably not an issue with ubuntu, but with VirtualBox.
VirtualBox 2.1.4 doesn't know about Xserver 1.6. To run Jaunty within
VirtualBox and to be able to choose the resolution, you've got to wait
until sun releases the next version or try the Beta of VirtualBox 2.2.
With VirtualBox 2.2 it's possible to compile the kernel modules. It's
even possible to run Compiz inside a virtual machine ;)  http
://christoph-langner.de/en/2009/03/compiz-und-3d-beschleunigung-in-
virtualbox/

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Cannot set resolution higher than 800x600 when running Jaunty Jackalope through 
VirtualBox
https://bugs.launchpad.net/bugs/301028
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