12.04 - Increase laptop screen resolution over 1024x768 on HP Compaq Presario v3000

Just installed Ubuntu 12.04.
The default display driver has fixed my resolution to 1024x768. The only other option I see for selection is 800x600.
Is there a way to increase my resolution to see 1280x800 as many sites recommend? My desktop is not using the full screen. It's sticking to the left side. Have about 4 inches of dark unused area to my right.

Have been trying to configure this since 3 days. No progress made so far :-(

As per some of the suggestions in the comments, I tried the following steps.

Step 1: cvt 1280 800
Output: 

# 1280x800 59.81 Hz (CVT 1.02MA) hsync: 49.70 kHz; pclk: 83.50 MHzModeline "1280x800_60.00" 83.50 1280 1352 1480 1680 800 803 809 831 -hsync +vsync

Step 2: xrandr --newmode "1280x800_60.00"   83.50  1280 1352 1480 1680  800 803 809 831 -hsync +vsync

Step 3: xrandr --verbose --addmode LVDS1 1280x800_60.0
Output: 
X Error of failed request:  BadMatch (invalid parameter attributes) 
Major opcode of failed request:  149 (RANDR)

Minor opcode of failed request:  18 (RRAddOutputMode)
Serial number of failed request:  27
Current serial number in output stream:  28

Is this due to refresh rate? My xrandr gives the following output now:

Screen 0: minimum 320 x 200, current 1024 x 768, maximum 4096 x 4096
LVDS1 connected 1024x768+0+0 (normal left inverted right x axis y axis) 0mm x 0mm


1024x768       60.0*+
800x600        60.3     56.2
640x480        59.9

VGA1 disconnected (normal left inverted right x axis y axis)
TV1 disconnected (normal left inverted right x axis y axis)
1280x800_60.00 (0xd5)   83.5MHz
h: width  1280 start 1352 end 1480 total 1680 skew    0 clock   49.7KHz
v: height  800 start  803 end  809 total  831           clock   59.8Hz