720p should just be ok with everyone as far as streaming content. The bandwidth available on typical ISPs make the difference matter...a LOT (720p vs. 1080p). Just be ok with 720p. Choose to be ok with it.
If it matters that much to you, go BUY the movies on Blu-Ray and spend more money.
It's one or the other. Those are the available options.
Why do we have to justify "720p is right" with this kind of logic? All interested prospects of an

TV probably have iTunes. They do go together. But all interested prospects of

TV do not necessarily want to buy one because they want to rent/buy content from the iTunes store. Everything we already have in our iTunes library can also flow through this little box to our HDTVs. If we have a lot of content already, we may never need to rent/stream a single thing from the iTunes store to still get tons of use & joy out of an

TV.
For example, for all of us Mac people with iTunes, we probably have iMovie too. iMovie can import our home movies from 1080i/p camcorders, let us edit and render it back out in 1080i/p, and those renders will import right into iTunes... and play there just fine. Now we have legal 1080i/p content in iTunes. In my case, I have a lot of this kind of 1080i/p content (1080i/p camcorders have been out for a long time now).
Had this

TV been built with 1080p chips instead of 720p, it would be the last link in the Apple chain to move content from my iMac to my 1080HDTV without sacrificing image quality (quality that everyone at my house can see in spite of "the chart" and other such arguments). Instead, that can't work- I have to downgrade the quality of that particular video if I want to be able to use the easy, dynamic, on demand vehicle called

TV to get it on my HDTV screen.
None of that involves the iTunes store, or national broadband pipes, nor causes any clog ups to national broadband infrastructure, etc. It doesn't require fiber in the home, nor any major changes from the exact same set up that has been in place at my house since the first version was released in 2007... except, the little box needs a 1080p chipset to make that last link from iTunes library to HDTV.
Relative to the poster, that’s not one or the other, it's involves neither of the 2 options you imply are all options.
Much like launching iPhones with tethering hardware or iMacs with Quad core i7s & Grand central before outside factors like third party software or AT&T infrastructure was ready to handle them, there would have been absolutely NOTHING wrong with rolling out a 1080p-capable

TV box while still offering only 720p & SD video in the iTunes store. Until there are lots of 1080p

TV's in homes, it makes NO SENSE at all to even try to offer 1080i/p rentals for

TV until there are

TVs that could actually play that software.
These kinds of arguments seem to try to justify "720p is good enough" by requiring all this other stuff- pretty much beyond Apple's control- get addressed first, so that then Apple could make a 1080p version to follow. It sure is a good thing that Apple doesn't do that with all the other stuff they make. Hardware has to lead.
Waiting for national broadband to expand... and waiting until there is 1080i/p content in the store... and waiting until all U.S. homes are re-wired with fiber... and waiting until all the "we don't have the storage for those big files" is addressed... etc translates into a very long wait. And all that is beyond Apple's direct control.
Had Apple launched a 1080p-capable version yesterday, I wonder if all the "720p is good enough" people would be on here griping about the overkill, how it's going to fail due to national broadband, no fiber in our homes, lack of storage, etc. In other words, if it did come out with that hardware capability would all the cheerleaders be the fault finders, and all the fault finders be the cheerleaders? Or would pretty much both camps have got what they wanted- a device that would play 720p to the fullest it could be played (thus no change whatsoever for those happy with 720p) as well as a device that could also cover the "1080p or bust" camps needs?