Well, i got a SOny Bravia 32inch 1080P TV, and the XBOX 360 allows me to choose "Optimal" in the settings menu. When i select Optimal, my tv goes into PC mode, and the resolution on the screen, is that of my tv 1360X768. The picture coming from the 360, looks like as if i have a pc hooked up, it's perfect, perfect color, smooth edges on the word, and the games, Wow..... they look just amazingly crisp. But when i try out the 1080P option, the graphics in games look like a clean component cable hookup, blacks are thick, and color a bit too vibrant, and you can see edges "aliasing" on characters and things.....

So i would choose Optimal if you have the option, and use "Expanded" for the reference, because that is for LCD TV's that have PC Inputs like vga and dvi in the back of the tv, and for LCD computer monitors. =D.