As usual Linux gave me the headache of installing and optimizing, no big surprise there. So as usual I am writing it to my blog so that I do not forget what I did when I need to install yet again. I found the solution on PSUbuntu.com Forum (link)
Below are the steps to resolve the resolution on PS3 Linux:
sudo /etc/init.d/gdm stop
(Alt-F1 to switch to the first console in tekst mode)
ps3videomode -h (for the lists available)
ps3videomode -v {x} (change x to the resolution you want to try)* if you found what you where looking for, try filling up the screen with x’s to see if the screen doesn’t have any anomalies
Start the gdm to see if it works in Gnome:
/etc/init.d/gdm start
If it does, go to a terminal console and make it final through editing (or creating) a "ps3videomode" file in the /etc/event.id folder:
sudo gedit /etc/event.id/ps3videomode
Insert the following commands in this file:
start on run level 2
exec /usr/bin/ps3videomode -v 3 -fSave