The biggest difference I saw was less jaggies.
On my Xbox 360, connected with Component Cables on my Sony Bravia 1080p tv (1080p through HDMI only), I ran Ninja Gaiden II at 720p and at 1080i and noticed less jaggies at 1080i. I'm sure 1080p would look even better, however my 360 doesn't have the HDMI output.
That said, I am running my PS3 with HDMI at 1080p and there are very few jaggies that I could find in any of my games - there are a few here and there, but I'm sure they would be more noticeable at 720p (I haven't tried running it yet).
On a side note, I also recently got a Philips brand 1080p upconverting dvd player and running that with HDMI, I can see a difference in my dvd movies, even over my 360 at 1080i (maybe HDMI is that much better than component).
Edit: disregard the DVD movie thing, I just remembered that the 360 isn't upconverting any dvd's, it switches to 480p when I run one.
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