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This bug has been copied from bug #623652 and has been proposed
to be backported to 6.0 z-stream (EUS).

This is fixed in xorg-x11-drv-qxl-0.0.12-2.1.el6_0.1, moving to modified.

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    New Contents:
When using the xql driver, only a limited number of resolution choices were available for use inside the guest, none of which exceeded 1024x768 in size unless the xorg.conf configuration file was (first created, and then) manually edited. This update ensures that larger resolutions are available for guests with appropriate hardware without needing to manually change xorg.conf.

An advisory has been issued which should help the problem
described in this bug report. This report is therefore being
closed with a resolution of ERRATA. For more information
on therefore solution and/or where to find the updated files,
please follow the link below. You may reopen this bug report
if the solution does not work for you.

http://rhn.redhat.com/errata/RHBA-2010-0917.html