If you're focus is desktop or laptop computers then I would suggest making your site fit nicely within an 800x600 resolution screen. Many users still have their screens set at this resolution and your best bet is not shut these users out if you can help it.
Most web stat software (i.e. google.com/analytics or statcounter.com) will report the screen resolutions of your site visitors. Use this information to make an informed decision, if you have very few 800x600 visitors then you may feel it's ok to move to a 1024x768 resolution to better suit the vast majority of your visitors.
The best option is to give your users a choice. Create a website that fits within a 800x600 resolution screen but allow it to expand if the screen is larger. Take a look at my site for an example: http://computersconfuseme.com
At the top left corner I have a link that allows users to choose between a fixed or floating layout. The fixed layout is set to fit a 800x600 and the floating layout expands and contracts with the browser window but has a max width set to prevent the text from spreading too wide and becoming difficult to read.
For an image, remember not everyone has high speed internet. Your best bet is to make it small enough to load quickly but large enough to easily view the details. Maybe somewhere around 300-400 px? If the image takes to long to load people wont wait ... people are lazy on the internet and will get there information somewhere that loads faster. If its to hard to read or see it isn't any good either.
I hope this information helps!
Scott
http://ComputersConfuseMe.com