This is a confirmed issue and the proposed fix works on System76 Serval
3 laptops, as confirmed by System76:
http://ubuntuforums.org/showthread.php?p=6105732#post6105732
** Changed in: cheese (Ubuntu)
Status: New => Confirmed
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[intrepid] Cheese chooses wrong resolution by default and fails to work
https://bugs.launchpad.net/bugs/294142
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