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sudo gedit /etc/X11/xorg.conf
You should be able to edit /etc/X11/xorg.conf using the following in the terminal:
Code:sudo gedit /etc/X11/xorg.conf
Look at the list of resolutions and see how this file is formatted and add a custom resolution, but make absolutely sure that your monitor/host machine supports the resolution/color depth you type in there... then restart and it should at least be an option now or it might even default to that higher resolution on restart.
It's probably advisable to create a snapshot of your VM so that if you bork it by editing the xorg.conf file you can easily revert.
Update: Here's a link with some additional info and more detailed steps.
I installed Ubuntu 32bit desktop in Virtual box and cannot select a resolution beyond 1024x768. I installed the guestadditions and tried pretty much everything, does anyone know if there is a fix for this yet?