Hmmm..OK, well, as you have now learned, editing the xorg.conf file is best done from WITHIN the graphical environment, rather than with that -config thingy.. You may as well get accustomed to doing the editing yourself, because there is a WHOLE LOT MORE that you can do with X than the -config will do. You just have to edit the file, save it, and restart X for it to take effect.
Use caution-- If you screw it up, you will need a way to fix it; either you will have to edit the file from the command line using nano or mc, OR boot the LiveCD, mount your root partition, and chroot into it to edit the file.
I recommend you download and install mc (Midnight Commander) as it is the most complete, useful, and easy to use console file manipulator I have found. There must be a version for Ubuntu.
Personally, I use 1600x1200, and in Firefox, I have the fonts configured with a minimum allowable size, so NO text can get smaller than xx-amount.
Generally, Firefox displays perfectly well, and the odd time the text is too small somewhere, I just click View --> Text --> Enlarge font, and problem solved.
Carefully config the font sizes in Firefox to your liking, and check the box for "Use my fonts instead of the websites fonts" or whatever it says.
Also, I want to comment, that unless you have a widescreen monitor or some such thing, 1280x960 is somewhat of a weird size. Consider trying out the 'normal' ratios, ie: 1280x1024 and 1152x864 (this is a good compromize between 1280 and 1024).
When I first loaded Ubuntu, it had my display set to such a bizarre size, I was getting staticcy lines on the display, and the resolution was gigantic. It's all good now, but then, I don't have ubuntu installed anymore
I just use the LiveCD sometimes.
Finally, if you have multiple resolutions available in the xorg.conf file, you should be able to use CTRL-PLUS and CTRL-MINUS
to change resolutions on the fly.
Good luck, and happy Ubuntuing! I'm around a lot, and on Kopete if you get in a jam..