Thanks, tman.
Go into the display settings, under advanced settings, monitor, uncheck hide modes that this monitor cannot display, back out of the display settings entirely and go back into display settings. This not only gives you options for refresh rates that weren't available but will also give you resolutions that weren't previously available.
Now, whether this works with the stock drivers is a ? to me, but it should work with the latest 158.xx drivers.
If your card is not a 8x card, powerstrip should help you. just install the trial, add the resolution from powerstrip and you should get the option.
Like I said, you may need the 158 drivers to make my suggestion work. It's specifically stated in the 158 release notes. Also, with the nvidia control panel in 158 you can add HD timings and that should give you your resolution as well.
I've tried the beta 160 drivers and it seems those drivers will not only allow you to add specific timings but will underscan/overscan on the fly, at least this was the case with component out.
I would disagree with that statement for HTPC/gaming purposes. the 158.24 drivers are the most solid/performing drivers while the 160 drivers are the best performing that I've used on both 7 and 8 series cards. The stock driver lacks DX, purevideo, and a ton of other driver add ins/enhancements - you'll see a difference in HD performance and guide transitions at least. Now if you have SLI or 88 series or some other anomoly of cutting edge, yes there's still a lot of work to be done on the driver development, but for most users 158/160 are pretty solid.
...Creating a restore point before installing should grant you nothing to lose :)
You don't need Powerstrip to run a standard resolution like 1280x720. It seems to be a bug that the Nvidia drivers sometimes don't offer this resolution. I had run into a similar problem. What helped was adding the following line at the end of the section [nv_SoftwareDeviceSettings] in nv_disp.inf. HKR,, NV_Modes, %REG_MULTI_SZ%, "{*}S 320x200 320x240 400x300 480x360 512x384 640x350 640x400=1FFF;SHV 640x480 720x400 720x480 768x576 800x600 852x480 853x480 854x480 864x480 1024x640 1024x768 1152x864 1280x720 1280x768 1280x800 1280x854 1280x960 1280x1024 1360x768 1365x768 1366x768 1400x1050 1440x900 1600x900 1600x1000 1600x1024 1600x1200 1680x1050 1800x1440 1920x1080 1920x1200 1920x1440 2048x1280 2048x1536 2560x1600 3840x2400x8,16,32,64=1F;"
(You will to install that driver again afterwards using this inf to make it appear.)