Not to be master of the obvious, but I was having the same problem: I received my Apple TV yesterday. Hooked it up to our main TV only to find that it was reporting a currently TV resolution of 720p HD - 60Hz. I was 99.9% sure the TV supported 1080p, but hooked it up to another TV that I knew for sure was 1080p, and lo and behold, the same reading "720p HD", even after resetting the Apple TV.
I was convinced Apple sent me an old Apple TV.
So here's what I did:
- checked the specs of both of my TVs to confirm what their resolutions were...one was 1080i and the other was 1080p. Armed with that reassuing information I repeated by tests
- tried a different, new HDMI cable. THAT made the difference.
Before blaming the Apple TV, double and triple check that your TV is 1080p compatible. Once you know that, then try a different HDMI cable. I'm no AV expert, but too many times I've found that a wonky HDMI cable is what's causing a problem.
I hope this helps.