Then it also requires conversion to 16bpp on blitting right now degrading performance.

LCD controllers of both Nokia 770 and N800 support 32bpp RGB modes in hardware according to documentation, but kernel framebuffer driver does not have code to support this color depth. Most likely adding support for 32bpp to framebuffer driver is simple (fanoush already has a patch to fix broken YUV420 mode on Nokia 770, and this work is somewhat similar), it should just copy some existing video mode support code and set a different value in LCD controller register. But more problems have to be solved in userland as we don't have any flexibility in video modes selection (the same problem as with setting low resolution). Another problem is that 32bpp mode will require twice the video memory and will double RFBI/SOSSI bandwidth requirement which will be quite bad for N800 with slow video bus. But if we assume that 32bpp mode will be always used together with pixel doubling (or upscaling 2x and more), it should fit video memory size and layout fine (it will be enough to store two 400x240 32bpp screens and even implement double buffering).

Do many games want 32bpp video mode? Will they be fine with 400x240 resolution restriction?