First of all, the picture is cropped on the left and right of the screen (more so on the left), so you see less of the game. Just check out the amount of space you have on the right and left of the dashboard 'blades' when you switch to 1080p, because it is reduced quite drastically. This also carries over to games, so you will have less peripherial vision
Second, there is a white bar that runs vertically all the way down on the far right, and a thick bar of distortion that runs vertically on the far left all the way down.
I've confirmed this on my sony 24" trinitron fw900 widescreen crt pc monitor via 360 monster vga cable, and had my brother confirm it as well on his westinghouse 37" 1080p LCD via MS vga cable.
Piss, and i was looking forward to 1080p....i guess i'll be going back to 1280x1024 widescreen.
On a good note, they fixed the dvd playback so it is not so damn dark with really low contrast. The picture is excellent now. Blacks are black without the picture being too dark, and the contrast is great.