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Well, having a low-end PC, I have to make this trade off all the time.  I usually put all my settings to High first and then adjust the resolution accordingly to get the desired frame-rates.

 Besides, Im not sure if it is because I have a relatively small monitor (22") but I can barely notice any difference between 720p and 1080p.  I assume that the bigger the monitor, the more noticeable the difference would be.

 

And now an example:

Recently I have been playing Portal at 1080P, everything Ultra High and 8x AA.  And Doom at 720p with Medium settings  and no anti-aliasing.

And Doom looks a lot better in my opinion.  So yeah, I prefer graphics over resolution.