Times have changed since this was established as a best practice. As few as 5 years ago, 800X600 was the most common computer resolution, used by over 50% of web users. Today that number is closer to 10%, and unlike 5 years ago, it is usually a concession for poor eye sight ( often signifying older users ).
2002 Screen resolution statistics
49% 800X600
38% 1024X768
5 % unknown
2007 Screen resolution statistics (recorded from Taming The Beast)
51.80% 1024×768
12.04% 1280×1024
10.88% 800×600
8.83% 1280×800
3.58% 1152×864
Back in 2002, you could count on the vast majority of internet traffic to sport one of two resolutions: 800X600 or 1024X768. Higher resolutions were too uncommon to even consider. Had higher resolutions of 1280X1024 been a reality five years ago, there is no way that 800X600 would have ever been established as a best practice. The reason? 800X600 fixed width websites look horrible when viewed at 1280X1024. They seem to make use of only 1/3 of the computer screen and make for a painful user experience. It is a given that this will drag down conversion rates (unless you target people with narrow angle glaucoma).
Adaptive width, the new design standard
For the modern online business, you need a site design that looks good in any resolution. Therefore, the new best standard is to use an adaptive width site design that will scale to any resolution. An adaptive width website looks good on any screen size, from 800X600 to 1600X1200.
Second best choice to Adaptive Width?
If designing for an adaptive width is not an option, I would recommend a 1024X768 fixed width design as your next best choice. Why? For one, it is the lesser of two evils. More and more people sport high resolutions of 1280X1024 than low resolutions of 800X600. Hence, a fixed width design of 1024X768 will frustrate less internet traffic than an 800X600 design would. If you need further reason for embracing a 1024X768 design standard, your must indulge in a few assumptions about demographics.
Low resolutions of 800X600, in most cases, signifies users with impaired vision or low income. Assuming poor vision is more common in senior citizens, we can characterize 800X600 browsers to be primarily composed of older users who are statistically less likely to buy online. Compared to high resolution browsers, who have the money and desire to use the newest technology, it seems 1024X768 is a better design standard as far as fixed width is concerned.