Here’s a good article worth reading. http://www.hometheaterhifi.com/volume_14_1/feature-article-1080p-3-2007-part-1.html

It doesn't specifically address whether 1080i or 720P is better, but gives the reader a fairly good picture of what’s happening in the pixel chain from source to display.

Personally, I prefer 720P over 1080i. Especially for sports.