You want to be double sure you have a 1080i tv. Which basically means CRT tube based or CRT Rear Projection. Nothing else is 1080i native, or particularly run in a interlaced mode.
So the best resolution to use is the one that matches the native resolution of the tv. So if your tv is 1080i, giving it 720p only means it has to convert it to 1080i anway, and I bet the 360 would do it better than the tv would. The PS3 on the other hand, doesn't upscale, so 720p games play at 720p. Except for some newer games that have built in upscalers and change it to 1080i, But sometimes those don't activate until you totally disable 720p in the options, which then can mess up other games that can't upscale.
Most people will say 720p, a progressive signal is better for games. Works better for faster motion and supports all the way up to 60fps, while the 1080i is limited to 30fps. Which again doesn't matter much if the 720p 60fps is converted to 1080i by the tv.
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