QUOTE(eduardor2k @ Dec 20 2007, 09:42 PM)

Since 720p and 1080p are higuer than your native resolution, it means that using a source higher than 720p is worthless, so you are right, you can tell the difference between 720p and 1080p in your TV.
Actually. you also need to take into account the distance at which you sit away from your screen. An image at 1024x768 on a 1024x768 screen may not necassarily look as good as an image in a higher resolution that has then been downscaled. We're all told that perfect pixel mapping with the correct resolution is the way to go but I know from plenty of experience that when you have a more than capable screen with a good scaler built in that when you sit a normal distance from the screen with a higher resolution downscaled it does in fact look better to the naked eye. Yes, it may be an illusion but that illusion means that to the the eye there is a much better image there. I notice this the most on PS3. I can see so much more detail in 1080 than 720 and according to theory it should look the best in 720 because that's closer to native BUT when I am sat in front of my screen in my lounge that simply is NOT the case.
The only thing that looks best at the native resolution is my PC because of the size of text. That's it.
If I pressed my face up to the screen then I would see a difference but as soon as you are sitting more than 9 feet away it looks superb over the native resolution. You can give me all sorts of theories, articles and definitions but nothing beats seeing it for yourself.
A couple of years ago I would have said the same as you but after actually tweaking with different software, expensive cables & expensive scalers in a real world situation my conclusion is that displaying the correct resolution is only the best solution when sitting at an un-naturally close viewing distance. At the end of the day our eyes are not digital.
Also, pc monitors don't count in this because you do naturally sit close them and so in that situation the best resolution is native. I know I lot of people everywhere will completely disagree and tell me I'm stupid but I've managed to prove it to plenty of non-believers who know a lot about this stuff by just showing them.
EDIT:
As for VGA not looking better than HDMI. You will notice that earlier in my previous post I mentioned about screens not displaying the signal so well. So, it's not down to it being a worse signal but that the screen just doesn't handle it properly and so indeed one will look better than the other.