Ahem - So this system will magically make my TV resolution change?
I have a PS3 on 480i, and guess what? It displays at 480i, not what the software can max out at, 480i.
So take the highest resolution the general gaming population can afford (1080) and that's the point of which there is no point in currently improving graphics beyond.
I'm not sure that you fully understand how graphics rendering works.
While pixel count (and therefore resolution) is important for certain things like textures and anti-aliasing, the number of base polygons doesn't change from 480i to 1080p. While a 1080p game capture will have more
pixels it will
not have more
polygons.
The graphics engine doesn't render each pixel on the screen individually, but keeps track of many levels of polygons. In fact, it renders many times more pixels (and polygons) than the screen displays, but since parts of the 3D image cover other parts, it's not displaying every polygon (or pixel) that it actually renders. For example, when you're watching two cars pass each other,
both cars are being rendered, even when you can't see most of one car because the other is in front of it.
The more polygons that can be rendered, the better the overall screen image will be, regardless of the resolution. More polygons means more detail in areas that are seldom seen (e.g. the underside of cars), more detail in background images (e.g. track buildings and spectators), and even things like better collision detection because of more thorough modeling. There would be better damage as well since damage could do more than merely deform an existing polygon.
While you're right that at a certain point there are no more noticeable returns, we're not anywhere close to that point yet, even at 480i.