Ubuntu switches to old display resolution in VirtualBox

Problem

I had increased the display resolution of Ubuntu in VirtualBox using Guest Additions, as explained here. Today it switched back magically to a small 800x600 resolution after a reboot! And also the resolution would not increase or change to match its window size.

Solution

Ubuntu had updated itself before this happened. Apparently, it overwrites the display resolution settings or drivers that were enabled by Guest Additions. Once I suspected this, I installed Guest Additions again, as explained here. A reboot later, Ubuntu was in high resolution matching whatever size I dragged its window to.

Tried with: Ubuntu 12.04, VirtualBox 4.2.4 and Windows 7 Professional x64