I was afraid you would ask that. A an old friend of mine, and a two time Pulitzer Prize winning photographer, told me that during a seminar for pro photographers Canon technical types told the pros to always use 720P and why. But he does not remember why.
I have a 7D and there is zero question that 720P video "looks" better than 1080P. If I had to guess I'd say it's due to less upsampling/interpolation at 720P. I've been told and noticed that stills shot in "small" jpeg look identical to "large" jpegs even though the small jpegs are about 1/2 the size, sometimes smaller than that, in memory size terms.
My 7d is advertised as having an 18 megapixel sensor. That's a lie, the sensor is maybe 9 megapixels upsampled to 18. Everyone does this. I think this is why stills/video taken at closer to the sensor's native resolution look as good as or better than pushing the sensor and brain to the max.[/QUOTE]
The sensor is 18 megapixels. There are 18 million pixel sites on the sensor. Each one is sensitive to only 1 color though. 1 red, 1 blue and 2 green pixels sites is the ratio I believe. Even then 18 / 4 = 4 million+ sites that contain all the colors. 1080 video is only about 2 megapixels.