The general guidelines to follow when changing the default screen resolutions are:
To run the X Windows environment in 8/24 mode, set the screen resolution to 24 bit-depth.
By default, screen resolutions 1280 x 1024 and lower will automatically be set to 24 bit. Higher resolutions will default to 8-bit mode.
Use GFXconfig -i to test a resolution before configuring the screen to that resolution.