Indeed he has, and how it seems -
The PS3 deinterlaces any signal coming out of it, just like a Blu-Ray Movie Player.
So, if you tell the PS3 "I have a 1080i tv", it will say "1080i, no go, we can only output a deinterlaced signal, send the lowest possible - 480p". If you tell it 720p, or 1080p (which are deinterlaced signals) it says "Ok, the tv supports the signal, were good to go"
Ideally, set the PS3 to output 1080p, most tv's wont accept it however, so to be safe, output 720p, as many many many TV's can support that (practically all flat panel tv's), and the majority of 1080i TV's can also do 720p, with the exception of the oddball TV, that downres's the 1080i signal to 540p.
Set it to 720p, should work fine for 90% of the people out there!
Hope that clears something up!