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"he thing is most people will see a difference from SD to 720P or 1080i but not from 720P or 1080i to 1080P"

like all too simple answers this isn't true as well. Every PC gamer can tell you that there is a big difference between 1024*768 and 1600*1200 for example. It depends on the size of the screen and your distance to the screen if it helps a lot or not so much.
But it is true 720p is the more important step, 480 lines is simply terrible and everything is blurred.