Not really. When you have a wider screen, you wouldn't expect to be able to see less. That's like buying a new graphics card, and finding that it didn't support as high resolutions as the old one.
Also, In most FPS games, enemies are generally at the same height as you, so there is little gained by being able to see more either up or down. There is, however, something to be gained from have a wider FOV.

I can confirm that some older ATI cards do not support scaling. My X700 Pro didn't. My new 4870 does. On my X700 the CCC only had the option of centered timing, and that didn't even work. This was with the latest drivers as of December 2008. When i got my 4870 all of the options showed up and worked, and i was using the same version of the drivers.

Ah but that's the thing, widescreens aren't wider than 4:3 or 5:4. They're just a different aspect ratio. Imagine if widescreen screens had always been the standard, then someone invents a 4:3 or 5:4 screen. One could argue that the new screen that's come out is the same, only taller. This idea that widescreens are wider rather than standard screens being taller is just a matter of perspective.
This is true, however the devs behind Bioshock said that it was a concious choice to make it that way to keep the feel of the game tight and claustrophobic. I can see that, and I can see people not being happy with it. To be honest, I didn't have a problem with either aspect ratio in the unmodded bioshock. I tried the demo on my 360 in widescreen, and then the full game on my PC in 5:4, both looked fine to me. However, some people think the letterboxing in Fear 2 is fine and I think it's crap. Each to their own I guess :).

You're right, of course. Still, when making the switch to widescreen, you usually get a display with a higher resolution than the one you had before. When I switched, I went from a 4:3 CRT monitor at 1280x1024 (because that's the highest it would go and still look okay), to a 16:10 LCD monitor at 1680x1050. So from my perspective, my screen area got 400 pixels wider (and 26 pixels taller).

OK - that is odd. I have the latest CCC and I do not see anything that looks like that.
Then it occurred to me: I could have a bad hardware setup for my ATI HD4870 Pro. I have it pugged in via the included VGA cable (15-pin?) which is pugged into what I believe is a DVI adapter plug, which is then pugged into the video card.
This is making sense...where your graphic shows "Digital Panel (DVI)" mine shows "Monitor Properties: 0"....
I assume one is digital, one is analog?
So from monitor to card it is thus: standard blue 15-in VGA conntector down to 15-pin VGA end plugged into a VGA to DVI adapter plugged into the HD4870 video card.
My guess is that because this is carrying an analog signal (which would explain some display issues and a few things not appearing the Catalyst software), I am hamstringing my video cards ability to use various abilities including aspect ratioing/letterboxing?
Is this a correct assumption? And why didn't the bastards include a DVI cable with my monitor!

It is not just a correct assumption, you're spot on. Go buy a DVI cable immediately ;-)
And yes, sometimes, even if the monitor you buy has both VGA and DVI plugs, they only provide you with a VGA cable. And that sucks.

OK, to summarize how to deal with widescreen support for games...
DOS: use DosBox (I use the DFend shell), as it places the program in a window. It's not perfect, but seems to work for the most part...
95/98: find a workaround on Widescreen Gaming and/or use your video card's or monitor's ability to letterbox or create a correct aspect ration. If neither of those solutions work, you're kinda hosed.
(Also, it appears ATI Tray Tools - a 3rd party applet, has some ability to help with the widescreen issue)
XP: mostly OK, as the games for XP are modern. About 50% (or more?) handle widescreen resolutions. And the newest games coming out should have no excuses not to.

DVI cables are more expensive. Also, until recently many video cards did not have DVI connectors (especially budget models), meaning far more people could use a VGA cable than a DVI one (including both with the monitor would cost even more, of course). Now that even the cheapest video cards have incorporated DVI connectors for about the last two generations I expect VGA will die off in the near future.

Will a DVI-VGA adapter accomplish the task of a DVI cable? I don't have a wide screen monitor, but the last three video cards I bought that had a DVI connector also included an adapter. If that will do what you need, you might look into finding one. They should be significantly cheaper than a DVI cable.

There is an unofficial tool for forcing DirectX games into windowed mode, but it's buggy as hell, slows the games down to a crawl and I can't even remember what it's called.
...
So this was no help at all.
Though just to throw in my two cents about another issue in the thread, there's really no fundamental difference of operation between VGA and DVI - the card is rendering and scaling the image before it's even sent down the cable, so the actual hardware beyond that should make no difference at all, even if it's going through all sorts of adapters (DVI-I can handle an analogue signal, so it's literally just different pins, rather than any sort of digital-to-analogue conversion that may interfere with the signal). It's feasible that ATi hampered it in the driverset, but I don't personally have an ATi card to test that theory.

So, here's a question. Let's say I get my DVI-D cabling set up, and Catalyst recognizes I am using a digital signal, and thus will do aspect ratioing/letterboxing.
And let's FURTHER add that I use ATI Tray Tools, which allows you to configure each application and specify what to switch the desktop resolution to.
My guess is, for old games that relied on desktop resolution, it would force them into the scale you want with letterboxing etc.
So ATI Tray Tools + digital signal thur CCC = very helpful for older games.
So Fallout I could be made to run its 640 x480, nice crisp and clean.... hmmm....

Don't DVI cables carry non-video data from the card to the monitor and back that enables a degree of limited plug & play functionality? An adapter would probably not help in that situation though it would be by far the cheapest option to try first (especially if you can just borrow one off someone)

DVI cables are not expensive at all.
http://www.monoprice.com/products/subdepartment.asp?c_id=102&cp_id=10209
I've bought many from there for my video/switches (I have my xbox and ps3 both plugged into my monitor along with my computer).
Don't be duped into buying super-expensive "monster" cables and other crap that they throw a name on and charge an extra 30 bucks for, those cables will work fine and just as good.

Yeah, as far as I'm aware it's like paying for a super-expensive ethernet cable. Completely pointless, a cheapo one will do the job just as well. Same goes for HDMI and most other digital interconnects.

Yeah it's digital, it basically works or it doesn't. This link pretty much says it all about overpriced cables