Nexus 7 capacitive buttons and display
The 1280x800 pixels count for the whole display, including the black bar for the buttons.

Google decided to stay flexible by moving physical buttons to the touch screen permanently.

Benefits:  


No capacitive buttons needed (cheaper?)
Better user experience: Rotating 90,180,270 degrees rotates also the virtual buttons
Less frame space (the button's space belongs to the screen now)
You can hide the buttons in full view (e.g., video playing)
Maybe: Avoid Apples infamous rectangle with a single button tablet design patent