I am seeing the same problem with 7.10 on a Sony VAIO: the GNOME applet for 
changing resolution does not work.  Interestingly, though, if I restart the 
system it comes back up with the screen resolution that I selected.  So it's 
just a *very* delayed response.  :-)

I disabled compiz via System > Preferences > Appearance > Visual Effects
and selecting None.  Now everything works perfectly: the GNOME applet
changes the resolution, no reboot required.

My system has an Intel 855 video chipset.  I switch back and forth
between 1024x768 and 1280x1024.

-- 
screen resolution change ignored
https://bugs.launchpad.net/bugs/159750
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