Some various info from the web...
"Displaying formats at their native scan frequencies cuts down on the picture artifacts that are generated when formats are converted up or down to another scanning frequency. These artifacts tend to get more severe when a scan format is converted from progressive scan (as in 720p) to interlace (as in 1080i).
Although the 1080i format offers more horizontal and vertical lines of resolution, the 720p actually has a higher scan frequency: 45kHZ for 720 versus 33.75kHz for 1080i and 31.5kHz for 480p."
And...
"Both 720P (progressive) and 1080i (interlaced) are considered high definition. If you compare 720P at 60 frames a second with 1080i at 60 fields a second, the actual closeness in resolution might surprise you.
At 720P 60, you get 1280x720 every 60th of a second.--. And the interlaced version is 1080i, in the case of HDV, is 1440x1080. (or 540 fields 60 times a second.) In the case of 720 60P, you actually get more pixels per second than with 1080i. (1280 x 720 x 60) versus (1440 x 540 x 60).There are actually more pixels per second on the screen at 720p than there is at 1080i in the HDV format."
And a very good review of why one is prefered over the other:
http://shop.store.yahoo.com/dvdinternational/dve-faq.html