One terrible thing about variable-width sites is that they tend to fall apart when you do a full-page zoom like what is built into ie7 (and I've heard Firefox3). Go to Gmail or Google Reader and hit ctrl+. It rapidly becomes a jumbled mess. Conceptually, I'm not sure how a browser developer can really deal with such a thing either.

I run a sports site, which is the bottom of the technological heap, and only 3% of viewers have 800x600 res or below. Google Analytics provides this data. Use it.

I think presenting a better page to 97% and making 3% side scroll is probably a net win. The guy acts like anyone who has to side scroll will just be unable to use your site, though I'd suspect someone with an 800x600 screen is probably used to it.

Do you only have 3% because your site looks horrible for them, and they leave immediately?

You've gotta be careful with those statistics :)

"Most ideal size for a Web Site?"

If you're blogging, doesn't matter.

If you're selling something, you try to capture as much share as you reasonably can.

But if you claim to be an expert in web design/development, your site better render perfectly, no matter what I arrive with. If it doesn't, you lose your credibility, and the only thing that really matters is, "Where's the back button?"

I tend to prefer variable width in my own work, but there are plenty of fixed-width sites whose designs I respect (apple.com, for one). Setting aside mobile interfaces, you can safely go 1000 pixels wide. Of course, your lines of text shouldn't be that long -- you'll find few people advocating more than 100 characters on a line, especially for long blocks of text.

The short answer, then, is that the type of site you're doing is more relevant than some global preference.

The other thing to factor in is that not everyone browses with their window fullsize.