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I keep all of the content in an 800px wide div; every usability study will tell you that people hate reading long lines of text, and the same goes for rows of thumbnails. It saturates your vision. Keep the width reasonable and use lots of vertical spacing to keep the page looking elegant.
That said, there's no reason not to use background or other ornamentation that stretches out to 1024 or wider. Just be sure to do it correctly with CSS so that it doesn't stretch the browser window for people on smaller screens.
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