The obvious answer based on the symptoms alone is that you do not have either
the right graphics driver installed or your monitor is detected as a generic low
res monitor. My Nvidia card uses the same driver, but I have not had much luck
with it working to its full capacity with the open source driver. I use the
specific proprietary one and get full resolution with 3D effects.

Go to System, Administration, Hardware Drivers and see if there are restricted
ones that you can use. Mine always detects the 173 driver, but the 177 driver is
better for my card. You might have to experiment. Trial and error works for me.

See:
www.ubuntugeek.com/common-problems-and-solutions-for-nvidia-restricted-dr\
ivers-after-ubuntu-810-intrepid-ibex-upgrade.html

Per Nvidia's site, that's the most recent driver for my card. The driver is
enabled and is the restricted driver. The monitor is properly identified
and is shown to support up to 1280x1024. Currently the resolution is set to
1024x768.