I feel like this is getting fairly pedantic but the question "what width should your site be?" is flawed -- there is no single correct answer. It's alot like asking the question: "which browser should I develop for?" Clearly, user environments vary. The developing team must take this into consideration and work accordingly.

I think the best answer you can give to someone asking your question is the following:

If you can only design a single layout, use whatever resolution allows you to maximize available screen real estate while supporting the largest subset of users. (Note that this does not necessarily mean you should design the site to take up the entire width of the browser.) However, if you have the resources to evaluate multiple user environments (and I'd make the argument that EVERYONE does), then do so and provide conditional formatting. So, for example, a user with an 800x600 display will see a design optimized for that resolution without compromising the design used for others with larger screens.