That also applies to browsers. While Firefox was not really good yet, I was going with AvantBrowser in compact mode. I almost never used a browser without the "small icons" option set. I do hate those toolbars every application wants to add to your browser. So, for me, using a direct, simple and minimal broswer window is always the best way to go. I also rarely maximize a browser window.
Regarding the screen size I believe the 1024 columns and many rows as the aspect ratio requires is a good choice currently. If you target audience will certainly use smaller screens a more adaptive page sould be created. If that's not the case, users will be expecting to roll the page oftenly anyway. I read HN on my mobile (using Opera) and it adapts quite well.