in a word... yes. Most of the 7" and 8" widescreens have a native resolution of 800x480. Running the resolution at anything other than native resolution causes the LCD to attempt to scale the image to the chosen resolution to the best of it's ability. Some LCD's are better at this than others.
Long story short... running the LCD at any resolution other than the native will reduce picture quality.
If you have a display that is native to 800x480, and put let's say 800x600 for the resolution, it will try and split the horizontal pixels up to share 4 physical pixels for every 5 virtual pixels. So it will blend these pixels together and may (will) look a little blurry. Usually it doesn't look so terrible that it's unbearable, but the more virtual pixels are shared, the blurrier it gets (also text size becomes unreadable.)
Basically what nst6563 said, anything other than what it's native res is will reduce the quality because it tries to stretch the pixels to fit within the native res. If you can't get the res the way you want because of mobo issues, there's a software I think called powerstrip that enables any custom resolution.