No, it wouldn't look crap playing a 1080P video on a 720P screen.
However, if you are downloading something or whatever and have the choice between 720 and 1080, get the 720. 1080 uses quite a bit more power than 720 does.
If you want some HD demos, you can get some off Apple's website and Microsoft offer some too.
You only really notice a difference between 720 and 1080 up close - if you sit back at the proper viewing distance, it is almost negilable.