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Try both see which looks better. The 360 only draws games @ 720p so selecting 1080i just forces it to upscale before outputting.
IF you care for the best picture, make sure to calibrate your TV w/ a copy of DVE. Get it from amazon
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Optoma HD70, 42" Panasonic TH-42PX75U, Denon AVR-3805, KEF KHT2005.2, Panasonic DMP-BD55k Blu-ray Player, Monster PowerCenter HTS-3500MKII
BeyerDynamic DT990, E-MU 0404 USB, RockHopper Mini^3, Grado SR-80, Cowon iAudio X5, Acer Ferrari 4006WLMi, T-Mobile G1(aka HTC Dream)
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