Seeing as how the vast majority of games now are in 720p or less, and that the difference between 720 and 1080 is completely unnoticeable on anything less than 42 inch screen, and isn't a particularly big deal on anything less than 50 inch screen, I'd have to say yeah, 720p is fine.
1080p is really just a matter of technological bragging rights (it runs a 60 FPS at 1080p!), and for people who have massive TVs. I mean even if the adoption rate of HDTVs is significantly higher in 3-4 years, what will be the adoption rate on 50-60 inch HDTVs? Will that really be worth catering too?

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