a Resolution Independent OS such as the upcoming OSX 10.5 allows you to scale the whole use interface. More pixels per inch will make it looks sharper while retaining the same size (so you don't have to squint on a 160 ppi screen). The other thing you can do is scale everything to make it bigger or smaller. I can't wait to be able to resize the menu bar to... say... 50% of the current size. And toolbars and buttons and scrollbIars etc...
I use the little green zoom button a lot to get windows in sizes that make sense (damn you Firefox!, I will ditch you as soon as I have leopard where Safari has instant search) and expose to make good use of my Macbook's screen. It has the same horizontal resolution as my 19" Dell Screen at work which looks ridiculous next to the Macbook with it's sharp and colorful glossy display. I wish 200 ppi was standard... Maybe the next Cinema Displays and Macbook Pros that ship with Leopard? Please, Apple!

Note: I was ignoring pixel density.