10% at 800x600? What demographic?? That seems like a ridiculously large percent.
Screen sizes are more about the people who visit your site, and sometimes more specifically - the ages of the people who visit your site. (older people tend to have smaller screens - when in fact the opposite would benefit them better...)
Personally - I ignore the 800x600 market. A huge number of reports have shown that the real percentage of people at that res are tiny and aren't going to be the type of people I wont on my site anyway. I have a PDA version that people on iPhones or Asus eee's can look at if they want? I've never actually looked at the traffic it gets though... I'd say its tiny.
As for Google.com looking fine on 800x600 that because its an image, and text box and a couple of buttons. There isn't a site in the world that can get away with that nowadays. Gmail doesn't work to well on 800x600 - either do any of their other apps.
And as for the simple uncluttered feel i.e. web2.0 - how many sites that are popular to the masses have that going on? Bebo? no. Facebook? no. MySpace? Hell no.
Again I'll go back to my original point. Decide what res is going to be your minimum by working our what your demographic is going to be. Web designers? nice and big. Hearing aids? Probably smaller.
Edit, because once I read it again I had to!: And as for why 'ppl' should upgrade? The price of progress. briask, I don't know what you do but if you were coding a site - do you still factor in netscape? ie4? I don't there's anyone who still does. This is how the world works.