Actually, this is a very interesting thread, one which is currently an unresolved topic for video application support.
I adopted 1280 by 1024 because it was the only video mode between 1024x768 and 1600x1200 that my video card supported two years ago when I got my 21" crt. I'm now accustomed to it.
But recently I've been running two IDENTICAL 19" NEC MultiSync FE991 monitors side-by-side at different resolutions, 1280x1024 and 1024x768 (separate but identical Intel video cards). Anyone can absolutely tell the difference in aspect ratio. Fonts are more vertically "squashed" on the 1280 by 1024 monitor.
This difference in aspect ratio opens significant issues with viewing pictures and videos (not to mention fonts and icon design). Rendering applications (this applies to both photo-viewing/editing tools as well as video players) should be aspect-ratio aware when presenting material to the end-user. But in more than 90% of cases, the application does NOT attempt to learn the aspect ratio of the display and correct for it.
You can check this out if you happen to have two monitors that operate at different aspect ratios, hooked into the SAME video card, set to span a desktop across the two monitors. Start playing a video, and drag the application from one monitor to the other. (it is quite possible that this will fail anyway because some video drivers do not implement dual-monitor overlay support) If the video becomes vertically scaled during the transition, then your player does NOT account for this aspect ratio change, and it SHOULD.
The current release of Windows Media Player, for instance, does not account for aspect ratio changes (although I have it on good authority that this functionality is being actively investigated).
The same should be true for picture viewing as well. Any (visual) media content where aspect ratio should be preserved should be rendered in such a way that accounts for the aspect ratio of the particular user's display. Currently this is NOT done, and hence many people refuse to run 1280x1024 resolution because most content developers design for 4:3 aspect ratio only. It will only display correctly (for the time being) on a 4:3 aspect ratio display. Which means 1280x960, not 1280x1024.