I had this problem with 5.1 as well - I had a perfectly working xserver on my winbook XL (uses XF86SVGA X server) I was able to do 16bpp@1024x768 just fine, but the newer versions of this display server don't do it. They error out. with an error message to the effect that the display server doesn't support the particular resolution. When I remove the new display server and downgrade to the XF86SVGA server for redhat 5.0, it works just fine - using the same /etc/X11/XF86Config. ???
ps. the video chipset is Chips and Technology 65554 w/2048 video ram.
Have you tried building a new XF86Config configuration file with the new server ? I am running in 1024x768@16bpp as I type now...