I'm sorry but as I neither use Ubunutu or KDE it is quite hard for me to help you. I hope someone else jumps in to help in this area.
I could imagine that it will work with the latest driver from ati. The driver which ships with KUbuntu is as far as I know not from ati but is a free and open driver developed by the community. Therefore it lacks some features. So you could try to install the ati driver and see if it solves your resolution problem. For the installation see this guide: https://help.ubuntu.com/community/BinaryDriverHowto/ATI
Pay attention to the side note what to do if your X won't start after the change. It is by no means critical, but you have to know how to edit your X configuration within a terminal. So I would suggest to play around with the "nano" command in a terminal before you restart your X.
In the case you don't know X/xorg: Just look at it as the main program of all your graphical programs. Linux first starts in a terminal mode. At the end of the boot process, KUbuntu starts the X server automatically. For illustration try this while running X: Press "Ctrl-Alt-F1" and you will switch to the terminal. You can switch through the terminals by pressing "Ctrl-F2" to "Ctrl-F9". On one of these your X server runs. So you will be back in your GUI if you press "Ctrl-F7" (maybe it is on another terminal, just try them all out).
Solution 1 is just a shot in the dark. So if you want to know why there aren't any other resolutions, I would suggest the following steps:
1. Open a terminal/console and enter the command "xrandr". This will show you the available resolutions. The one marked with a "*" is your current one.
2. If there aren't any, or only one resolution you can look in the log file of your X server. Open up the file "/var/log/Xorg.0.log" in your text editor - for example with nano. You will find a section where X probes all known resolutions and checks if they will work with your display and graphics card. If not there will be mentioned the reason and you have a clue where to look next.
Hope this helps a bit, and I'm sorry that I mentioned in my first post, that you do not need a terminal and now I direct you to do everything in it
. But as I said, I don't know KDE/KUbuntu very well and the "terminal way" will work on every linux.