It depends on monitor maybe, is it possible that your monitor is too big to allow 1280x960 ?
I have there any resolutions from 640x480 to 1280x1024 and i was recording the last video at 800x600/fullsize/no sound/speed at 0.125x@10FPS. (Yeah i have a crappy comp, so i needed to do this to make video smooth as... as it was)
As far as I know, TV widescreen use 16:9 (you now have set 16:10), so if you want to watch it on tv then, record at 1280x720 and fullsize at fraps (well if you don't have it there too, then try to find 2560x1440 and record at half size, but that's really big resolution and i don't know what your fps will look like...), many gaming videos now have this resolution.