I accept that there are compromises that may need to be made. I strongly disagree that the 960-grid approach, which is currently popular, is on the right side of those compromises though, it hinders far too many people. I've not noticed any advertising banners wider than 768px, so I'd be very surprised if you needed a page much wider than that even if you need to accommodate ads.
(c) the only sensible decision is one which people can easily understand and reduce to simple terms. With fixed widths you'd have every advertiser needing to discuss screen size, how the ad may shrink, where it goes when screens are made wider or reduced and other variables. Every additional variable adds another part to the equation and nobody wants to get short changed. By having limited but perfectly accepted widths, order and expectations are regular and expectations are maintained.