I have a 32"lg lcd hdtv and the 360 hooked up through hdmi cable. In the 360 options when I choose optimal, it shows 1024x768. (I presume its iterlaced) Would nt choosing 720p or 1080i be better?

Its hard to know because you have to change the option in the 360's options and cant do it in game so it would be eaiser to notice the diff.

What settings do you guys use?

1080i all the way

it really depends on what your TV can support..

Mine is 1080i but then I only have a 32" for my room.. If I was doing all the gaming in the living room I woulda gotten a much larger TV that went up to 1080p..

I'm pretty sure its:
480p is 640 x 480
720p is 1280 x 720
1080i is 1378 x 768
1080p is 1920 x 1080

Not sure about the resolutions inbetween..
848 x 480
1024 x 768
1280 x 768
1280 x 1024

All the resolutions listed above are what appear on the VGA lead.. although if you select a resolution thats incompatible with your TV try NOT to save the settings .. because it might be very hard to see the screen again..

The main problem with LCDs these days is that lots of people set the contrast and backlight too high.. My picture used to look like this but I toned it much lower now..

I tried 1080i and I think it makes some jaggies. Im trying different option every time I play a game, but I think 720p is most likely the way to go. It just through me off when it said 1024x768 was optimal because it sounded unusual to me.

Cheers to above posters for advice.

1024 x 768 is odd because that's 4:3 resolution, not 16:9 which you'd expect for a widescreen hdtv (as far as I'm aware you cannot get 4:3 hdtvs).

In theory, 720p is best for games unless you've got a full HD TV (in which case you'd go 1080p). The main reasons being that progressive is better than interlaced for fast moving images, and unless you've got a full hd tv then the 1080 picture's gonna be scaled down to the 720 picture to display on the TV anyway.

I say in theory because some people will swear that 1080i is better for them, and who's to say it isn't.