Everything from monitors to PDAs to laptops of various form factors. Even as late as 2007, 20% of displays seen in web stats were 800x600 or smaller. There were also plenty of devices that could have accessed the web but people didn't bother because the web was so broken with IE 1024 crapsites. The iphone happened in 2007. There was no period where the number of people getting boned by fixed 960px sites was insignificant.
>Remember, we're talking about the days before mobile was a big enough market to justify making mobile versions of websites.
That is begging the question. You can't assume X as a premise to demonstrate X. 20%+ devices were smaller than 960px. It took (and still takes) no extra effort to design a website correctly rather than with a fixed grid. Just as it took no extra effort to design a website correctly rather than for IE only. It is not a co-incidence that "best viewed in IE 5" and "best viewed in 1024x768" buttons were best buds. Both stem from the same source.