Sony's PS3 1.30 firmware came out yesterday, & it was supposed to have fixed the 1080 upscaling issue, but instead only set the video preference to default to 1080. What this means if you've only got a TV capable of 720p is that your default resolution will now be 1080i... which sucks if you prefer the progressive resolution (& many do).

"The video will automatically be displayed at the maximum resolution possible, according to the following order: 1080p, 1080i, 720p, 480p, Standard (480i NTSC). This change does nothing to fix the upscaling issue, and could possibly annoy those who wish to stay in 720p mode."