I had the same problem the last week, i call to microsoft and they change my xbox for a new, and send me a month of gold

Yeah man, my bad all day on that one, I deserve the noob bash. I did google something, apparently not the right thing. Seems that there a few people here that thought the same old myth so you helped out a couple of people.

Component is just alittle older connection, but even the "ANCIENT" 15 pin connection on prsonal computer monitors can display 1080p with no issues.. HDMI was only invented to become a replacement standard because Video & Audiophiles wanted something more compact.  HDMI is alot easier to hookup and people have enough cords behind their TV's as it is... besides the 'marketing' aspect of higher quality - HDMI is in no way superior in displaying 1080p...  High Quality Component cables can be Gold plated just as well..  Some of those gamers less school'd in HDMI versus  Component think because the 'orginal Xbox 360' ( at launch time ) didnt support 1080p ( it did 1080i ) that component cables must not support 1080p.  The only reason the original Xbox didnt (at first) do 1080p  was the 1st firmware version  of the Xbox didnt support it ( besides that - the 360's hardware was 1080p ready and component cables could display 1080p fine ) .. About a year after Xbox 360's launch .. Microsoft updated the firmware of the console to 'officially' support 1080p since gamers seemed to desire it and be buying more LCD's, LED TV's that supported 1080p..  When the update came out and I could watch 1080 on my original Xbox 360 it did sort of seem to be 'crisper' over the 1080i.. but its very hard to see the difference between 1080p and 1080i if its at all truely noticeable.. alot of people say they can see the difference, but part of it is 'They beleive and know it to be better' ...

well for the rumor of 1080p HDMI 1080i component to be completely full proof after what people said....

cable side:
HDMI=component=1080p

the problem is a lot of new monitor and/or electronic devices don't accept 1080p through component (only up to 1080i) anymore and force you to go with HDMI for full HD... so even though both cables support 1080p your TV might not have 1080p component input.... that's why that rumor really exist....

It might be why for some people, but alot of gamers use wide screen 32 inch LCD's ( or close to that size ) which don't do anything more then 720p ( because a screen that size doesnt have enough pixels to take advantage of a 1080p setting )... even though those sets sometimes only have HDMI... 

I've often wondered why 27-32" screens only run @ 720p(768p), when 22" monitors generally run @ 1080p.