The problems is that in 2010, the vast majority of internet service in the USA (where Apple hosts there servers) are too slow to provide 1080p content real time w/o severe macroblocking. For the bandwidth available in 2010, 720p provides the best quality. Increasing the limit to 1080p would only serve to REDUCE video quality for the sake of a marketing bullet point.
It's like having a 20MP camera with a cheap lens and poor low light performance.
Same old tired argument. By extension, we must wait until Comcasts, etc decide to fully widen the whole nation's pipes so that they can easily accommodate streams of 1080p before it makes sense to release

TVs with 1080p? Comcasts, etc have ZERO interest in that for 3 reasons:
- they are legally bound to maximize profits, which is not accomplished by sinking money into infrastructure unless that expense generates considerable more return (aka higher revenues from broadband subscriptions)
- typically they have a monopoly on broadband, or are 1 of maybe 2 choices in some areas. Too little competition for either player to compete on price, and the other player- if available- is also bound to maximize profitability (so see the first bullet)
- why bother if the broadband is going to be used to undermine their very lucrative cableTV revenue streams?
Stuff like that doesn't get done until the pressure is on (a monopoly), much like weaning us off oil (are we going to have to run out first?). When the pressure is on- when demand for greater bandwidth starts hitting them in the pocketbook- THEN they'll work on fattening the pipes. We just witnessed a variation of this when Verizon's "map" campaign called AT&T out for lack of 3G coverage. What did AT&T do about it first? Tried to sue to get Verizon to stop running those ads. Since? While they apparently have spent some money on 3G expansion, the bulk of the strategy is to run the 97% coverage commercials (conveniently leaving out that it includes a lot of 2G Edge, not 3G).
What makes sense is for Apple to LEAD with the hardware- just like they do by putting the latest from intel into Macs- long before the software is coded to take advantage of it. Waiting for the broadband to expand in a country the size of America is going to be a very LONG wait.
Besides, its not like everyone would be forced to only download huge 1080p files. Those with slower connections... or those satisfied with 720p... could keep downloading 720p. And those with the patience or the broadband now, could enjoy 1080p now.
The U.S. is not the only market for Apple products. Lots of other countries where this could sell well have the broadband for 1080p files.
And lastly, sources of content for

TV are not entirely limited to what we can get from the iTunes store. We've been able to make our own for more than 4 years with 1080 consumer camcorders. Youtube has 1080 content. Podcast video can easily go 1080 (some already is). Especially as it applies to creating our own content (HD home movies) broadband outside the home is completely irrelevant as an argument against

TV having 1080p capabilities.