Okay here is the answer to why this happens. Traditional standard defintion TVs, the tube type, have an area of the screen that is called overscan. The tube's screen surface is actually bigger than the visible portion with in the framing. This is so that we don't see the edges of the picture, as with a tube TV it doesn't look perfect. With plasma and LCD screens however, the every pixel is visible within the frame, there is no overscan portion of the screen that would be hidden in a tube TV. So developers of PS2 games try to maximize performance, by not rendering anything in the pixels that are over scanned on SD tube TVs, since that portion of the screen will most likely not be visible. So even after you adjust your game to widescreen, those thing black bars at the sides of your plasma TV, are the portions that would have traditionally been over scanned and not in the visible portion of a tube TV.
Now with games on the 360 and PS3 in HD, running in 720p or 1080i/p they are designed to use the full resolution, and on plasma and LCD TVs there is no need for overscan.
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