Never had any luck using that option. I think it is for old XFree X server and not the newer Xorg Server used today. Don't quote me on that.
Now for resolution it may be because the values defined in the xorg.conf file for the monitor. Also one can try by adding that resolution manually to xorg.conf for the 24 bit depth section as the first choice. There are usualy 2 or more screen resolutions in a row.
It might help to post the entire xorg.conf.
Distribution: RHEL 5.1 with Pieces of this and that.
Kernel 220.127.116.11, KDE 3.5.8 and KDE 4.0 beta, Plus Development src.rpm, ATI fglrx64_7_1_0-8.433-1 rpm with 3D and DRI working.
Acer 5100-5840 with webcam, ati, sdcard reader, sound, atheros based wireless, all working. Only thing not working is the memory stick reader.