Changing dpi settings in Display Properties

I was using a 17" Crt monitor with a resolution of 1280x960 but now I want to move up to a 22" TFT LCD monitor that will give me a native resolution of 1920x1200. It was told to me that this resolution cannot be altered and I guess that icons and everything else will be too small for comfort. But some other person told me that I can change the dpi setting in Display > Settings > Advanced from 96dpi to 120dpi. I tried the same on 17" and it seemed to change the text sizes, the icons on my quick launch taskbar and in the notification area, etc. The icons within applications looked the same, which is more concerning to me. So can anyone tell me whether the dpi setting only affects the Windows items and not the other programs? Thanks.

You are right, it is true that Lcd monitors should use their native resolutions. On a 22" monitor it will be almost the exactly same size as it was on the 17" monitor at 1280 x 960.

Thank you very much for the assurance.

Glad to help you out and you are also welcome.