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After installing the guest additions, i still find the choice of resolutions to be limited.
I have a widescreen monitor (16:9) but the resolutions that show up in the display properties are all 4:3, so the VM screen looks distorted.
How can I get the guest to run at a higher resolution? (Ideally, 1920x1080 would be good)

Information:
Host System: Ubuntu Karmic 64 bit
Guest System: Windows XP Professional SP3 32-bit
VirtualBox Version: 3.12 PUEL

After you have installed the guest additions you use the mouse click and drag or the host+f toggle to go to full screen. Full screen will go to what ever the host is set for.
You do not use the guest resolution settings once the guest additions are installed.