After a little bit of digging I now have the problem of my laptop showing the correct screen resolution as a secondary monitor alongside my 22″ widescreen.
I installed “Multiple Screens” application from the Ubuntu Software Centre and set the correct resolution and applied the settings. This caused my monitors to go completely wrong which wasn’t what I was hoping for! Time for a reboot and hope that it hasn’t screwed everything. After a reboot my screen monitors were showing the same resolutions they were when I started but after returning to System -> Preferences -> Monitors i found that 1280×800 was not only available to me but actually set the correct resolution. Problem solved.