If you boot into an Ubuntu live cd (all flavours), you get full resolution in Parallels. However, once you install it the display is limited to 800x600. The standard solution offered is to install Parallels tools but this has its own side effects and it isn't a solution.
What surprises me is that Debian doesn't have this problem, even though I cannot find any difference in terms of Xorg packages installed.
How can this be fixed? Installing Parallels tools is not the correct solution. I only want display as it is in Debian or Fedora and in the Ubuntu live environment.
Update Ubuntu 12.04 with Unity 2D (and Linux 3.11) works correctly. I tried Xubuntu 14.04 without 3D acceleration but it made no difference.