I leave mine on automatic so the TV adjusts to whatever resolution it receives, that means 576 for SD, 720p for Sky Sports and 1080i for the movies and some other channels.
If you set it to 720p or 1080i, will it upscale SD signals?
Also if you set it to 720p or 1080i will it switch between the two when Sky broadcasts different hi def signals, i have never tried it out so dont know