There is an interesting article in the September issue of TV Technology about the EBU's position on HDTV. It seems to come down on the side of 720P/50 (cycles) for several reasons.

First, Europeans seem willing to purchase the new advanced flat screen sets that are becoming widely available. Second, when surveys were conducted by the BBC it showed the median viewing distance to be 2.7 meters or 8.9 feet. By conducting tests on percieved detail it further showed that "720p/50 would saturate the eye with detail for screens up to 50 inches". Therefore, it was concluded that 1080p/50 would "provide more detail than necessary". "It was pointed out that if watched at the 2.7 meter viewing distance, the difference between 1080p and 720p would not be noticeable""

Also of note is the lact of any interest in interlaced scanning in either 720 or 1080. The clear thinking here is that "all the advanced displays are fixed-pixel displays and all are progressively scanned themselves".

The conclusion was that a single standard 720p/50 could be implemented to deliver HDTV "that would satisfy the demands of the viewer".

The EBU has always wanted a progressive format but it was pre-empted by the first broadcasters that went for 1080i and groups like Sony seeding the production market with 1080i too.
The biggest problem/deciding factor is the large number of existing STBs and those in the pipeline that need a lot of work to carry HD streams.
In contrast to the producers, who would ideally like 1080p because more is more, the broadcasters have their minds set on 720p because it is the easiest, cheapest way for them to get many HD channels on-stream in the available bandwidth capabilities. Have a look at TVBEurope magazine for the way the split is developing. One thing is certain, the europeans are not willing to let the US set the formats in this new area, so let us hope that doesn't create further incompatibilities.

Found this on the web:

http://www.ebu.ch/trev_301-editorial.html

It's from Philip Laven, Director of the EBU Technical Department. He makes no bones about it -- they prefer progressive and have no interest in interlace. He says that the "EBU favours the use of progressively-scanned formats, such as 720p/50 or 1080p/50, rather than interlaced formats such as 1080i/25."

Another interesting tidbit is when he says:
At an IBC 2004 session, I was asked to explain why format wars seemed to be on the horizon for Europe. Having explained the EBU’s position in favour of progressive formats, one member of the audience said:

“I am amazed that anybody would consider launching new services based on interlace. I have spent all of my life working on conversion from interlace to progressive. Now that I have sold my successful company, I can tell you the truth: interlace to progressive does not work!”.

This remark was followed by a spontaneous round of applause from the audience. When the person was asked to give his name, he replied “Yves Faroudja” (who is widely acknowledged as the world’s foremost expert on format converters).

Laven acknowledges that there will likely be competing broadcast standards in Europe... he says the EBU has no interest in prohibiting the use of 1080i; they recognize that some broadcasters may choose to broadcast 1080i material, and as long as consumer sets can receive that, then they're not concerned about it. But they feel that of the current technology, 720/50p is the optimum current solution, and that the EBU "strongly hopes that 1080p/50 systems will eventually become the norm. "

One option that doesn't get mentioned enough is that most existing computer screens, whether flat panel lcd or CRT can easily display 720p, but most are unable to display 1080p without an expensive upgrade. It seems 1080i and p would have to be reduced sort of defeating the purpose. With the net becoming an increasingly important distribution channel, there are some interesting questions that have to be raised and answered.

Considering its supposed to be all digital, 720p does have some compelling reasons.

Doesn't mean you can't shoot in 1080 though, for HD or SD for that matter.