I dove into XRandR. I wanted this to work for all users, so simply sticking some XRandR commands in the gnome session startup wasnt going to suffice. At the same time I also got interested in trying a dual-head setup instead of only an external monitor when one was connected.
Read it here
When I booted with the lid open and no monitor attached, the desktop would be 1400×1050. When I upgraded to Lenny this stopped working. I had to change the resolution each time I changed from external screen to internal screen and back. I reported a bug about this but the answer came down to Its not a bug but a feature. Use XRandR to change your displays if you dont like it.