I am currently working with virtual machines via Vmware vSphere on a Windows 2008 server. Initially I was unable to get the guest to render full screen and did not have all of the screen resolutions that I would have thought I should. What I was trying to do was have the guest Linux (in this case RedHat Enterprise Linux 6) run full-screen. It was not as straight forward as setting the screen resolution in the VM guest settings dialog.
After much trial and error the way to do it is to crank up the amount of ram allocated for the virtual video card. The guest will then have enough resources to render at full screen and you will have a wide array of screen resolution choices.