If you have a 1080i-capable television (that would be many older HD sets), you may be dismayed to learn that 720p PS3 titles will not upscale to fit the resolution. Instead, 720p titles will always be downsized to 480i or 480p. IGN confirmed this after testing four games -- Resistance: Fall of Man, NHL 2K7, Tiger Woods PGA Tour 07, and Need for Speed Carbon -- on a 1080i set that did not support 720p; all scaled down to 480p.
Take it as you will, whether you prefer 1080i or 480p. Microsoft's Xbox 360 currently upscales 720p to 1080i if necessary (i.e. 720p is not supported).
[Thanks, Kumar Shah and Miniboss]
[Update 1: Doing a little more research after reading many of the comments, turns out we might have been too generous in saying that most older HDTVs support 720p. We took out that sentence; just be sure to know what you set does and does not support. Also, rephrased the 480p vs. 1080i. I just tested the difference. Yeah, a bit different.]