For games which are 720p native, 720p. No-brainer. For games that can render in 1080p or 1080i natively, I guess 1080i might be better. Maybe. But I'll bet it would be hard to tell the difference. Take 5 minutes to do an experiment and if you can't tell the difference, does it really matter? They will both look good.
P.S. 1024x1024 is a retarded resolution for a 16x9 display, and if the Internets are correct these panels are actually natively interlaced, which is even retardeder.