Microsoft just announced that a software update is headed toward your XBOX 360. The update will allow for 1080p video playback. The software update will allow non-1080p content to be upscaled to 1080p. Although no games currently are designed for 1080p, gaming at 1080p will happen in the future. Game developers can now start making games for 1080p playback. Unfortunately, I doubt that Bungie has Halo 3 ready for 1080p.
Most HDTV’s won’t do 1080p. However, 1080p sets are now hitting the market at near the same price at 1080i and 720p sets.