Set Linux Server screen resolution in VirtualBox

After a bit of headache, I came across the magic combination that finally worked.
I'm using OSX as a host, and Ubuntu 10.04 as a guest.

First install guest additions. Run

sudo apt-get install virtualbox-guest-additions


OR
Click 'Devices'->'Install Guest Additions...', and mount the cdrom:

sudo mkdir /media/cdrom
sudo mount /dev/cdrom /media/cdrom
sudo /media/cdrom/VBoxLinuxAdditions.run


Add the following to /etc/default/grub

GRUB_GFXMODE=1024x768
GRUB_GFXPAYLOAD_LINUX=keep

After editing the /etc/default/grub run:

sudo update-grub
sudo reboot