A question that is asked frequently about Windows Mobile devices is why they're "lower resolution" than their Palm counter parts, particularly the Treo P (320x320) and Treo W (240x240) models.
The root of the screen resolution debate is less about what the "OS can support", or what the "screen can support" than it is about where the two OS's (Windows Mobile versus Palm) get their native screen resolutions from.
Windows Mobile (yes, even all the way pack to Handheld PCs and Palm PC's, remember those?) has always been based around the VGA model (640x480) or some even ratio of it.
Current Pocket PCs are (mainly) qVGA (quarter VGA) 240x320, with some at 240x240. How does one get this ratio?
Take VGA (640x480), rotate it 90 degrees (480x640) and take 1/4 of the pixels (half of each number). You end up with 240x320.
Now, Microsoft decided early on to offer a SIP (Soft Input Panel) rather than Palm's "scratch pad". This difference meant that, unlike Palm's square display, Microsoft could choose to free up the real-estate occupied by the SIP when it was not in use. Good move.
But that left Microsoft with a rectangular screen. They went with that. They built icons and other UI around the qVGA model. When square screens came around, they simply truncated the bottom of the screen, it was still 240 wide, so all the icons and UI still worked, but it wasn't as tall, therefore scrollbars might be seen more often -- but the icons didn't change.
Then came TRUE VGA (again, rotated 90 degrees) -- 480x640. This required Microsoft (an application providers) to create sets of bigger icons for the bigger display. Any applications that weren't "VGA Aware" simply had their icons "doubled" -- and they looked pretty blurry, but it was easy to simply double the pixels.
So what happened to 320x320? Well, since 320 is 1.5 times larger than 240, and 1.5 times smaller than 480, to handle this resolution Microsoft and all application providers would have to make another icon set, and for those that weren't "320 aware", how do you make a pixel 1.5 times as big as it was, or 1.5 times as small? It just doesn't work out.
So, you'll probably NEVER see a 320x320 Windows Mobile device... it's much more likely that you'll see a 480x480 device (since that's a truncated VGA screen and would use the "VGA Aware" icon set).
Why don't we see 480x480 screens today? They're simply too expensive right now.
So... hopefully that didn't confuse y'all too much. Questions?