Originally Posted by AquosS2k
well i'll be darned... what a waste. Thats the main reason i got the ps3, to display movies in 1080p
If you mean the GUI in 720P, if your display doesn't handle 1080P, even if it does 1080i, the PS3 will run the GUI in 720P - they don't want to have any flickering deinterlacing effect in the GUI (which is a mistake in my opinion as losing vertical resolution (or refresh) can be made up by thicker fonts and more horizontal detail, but that's their choice)
The movies will play in 1080i, as will games that support 1080i mode (ridge racer 6). Games that don't have 1080i modes (eg : 720P only or 720P & 1080P only) will play in 720P mode.