Existing VMs of guest OS X work fine, but any new, or VM that upgraded to "hardware 14" and the latest VMware tools installed, will not change the guest's display resolution no matter what settings are chosen. Either in Fusion Preferences or the guest's display settings. Going full screen doesn't work either, the display for the guest remains the same resolution.
I'm not on a retina display but it makes no difference if I chose "Use full resolution for Retina Display" or not.
It makes no difference if I choose "Use Fusion Display Preferences", "Resize the virtual machine and the window" or "Stretch the virtual machine in the window" (or the screen versions). It always behaves in the "stretch" mode.
There are no choices in display resolution in the guest's System Preferences->Displays other than the size it is stuck on (1024x768)