Totally on a game per game basis and personal preference.
I personally try to max out the graphics first and if that doesn't work I start by decreasing the AA and AF.
I prefer higher resolutions if possible because a lot of games will give you a larger field or view or smaller buttons and huds if you have a higher resolution.
With one 8800GTX in my opinion @ 1920x1200 will be possible in some games, but in others you will suffer (Crysis, Bioshock) and then you'll have the drop your native resolution to play it which won't look good. I believe a 20-22" monitor @ 1680x1050 is a good choice.
Unless you want to go SLI with two 8800GTX's then 1920x1200 is a go, Crysis is an exception to this rule. There are some 24" monitors out there that have what is called 1:1 pixel mapping which instead of going below native resolution, it just shrinks the image down to the selected resolution with black bars on the side thus staying native all the time.
Currently, your 8800GTX can run almost every game in the market at 1650x1050 with maxed out settings and get 60 FPS.
Crysis: You'll have to shrink resolution a lot.
Quake Wars: I wasn't able to put 16Q AA with good FPS.
While 19" is too small and 22"+ is too large, I found 20.1" monitors were best for gamers. They allow high resolutions a beautiful graphics. Gamers don't have to actually turn their neck to check from the right end of the screen to the left. Its true!
If you get a 20.1" monitor that will let your play games with higher than 1650x1050 resolutions then you'll see even better graphics...go for it!
So gaming at 1920x1200 playing Crysis and Bioshock with one 8800GTX, not everyone can afford two 8800GTX's. If the OP can't game at 1920x1200 with some of the games out there then whats the point of getting a big monitor if you can't game at that resolution?
You can't just say, "hell no man..24" is the way." You have to be realistic about it, the OP only has one 8800GTX.
Do you find yourself having to lower graphics setting at 1920x1200?
Not really. I still have textures all high/very high (bar crysis=high), I'd set A to 4x and AF 8x/16x.
COD4 is a good example.
Running this at 1920x1200, extra for textures and 4 xAA and 1/2 on the bar for AF.
Game runs flawlessly..
It's at these resolutions that the 8800's really start to show off.
You compare an 8800GTX and a 7900GTX at 1280x1024 and the difference is not much. But at 1920x1200 and more it's absolutely huge. Unless you're gaming at 1680x1050 and above it's pointless getting a 8800GTX.
It's just not worth it when you can get a card that gives you the same fps at half the price with AA+AF turned off or set low.