If you have black bars on the sides and it bugs you it is because the backgrounds for the game are in a 16:10 format and so if you choose a 16:9 resolution you get the bars. My native res is 16:9 but I set the game for 1280/800 which is a 16:10 res and bars are gone with no apparent gameplay problem.

Doesn't that compress the image vertically? So, for example, a circle would appeal as a wide oval?

I just double checked and played the game a little and it doesn't appear to make anything round into an oval. There is a round wooden shield hanging on the dwarf's wall and it is round in the cut-scene and is round once you gain control over the character as the game starts so there doesn't appear to be any abnormal stretching going on.
Maybe because the game backgrounds and movies are optimized for 16:10. But there doesn't appear to be any problem switching it from my monitor's native 16:9 resolution that the game defaulted to to the game's native 16:10. Much better than those bars too ...

OK, that's cool if it works. It's just that usually displaying a 16:10 resolution on a 16:9 monitor means the 16:10 image is either compressed vertically so it will fit on the monitor, or the top and bottom of the image are cut off. It's not a huge effect; running at 1920x1080 (16:9) versus 1920x1200 (16:10) means you only lose 120 vertical pixels. So if it's not noticeable then it's fine.