We already mentioned resolution in the context of bandwidth. Current Xbox games are processed in 640x480, which is perfect if you want to display them later on PAL or NTSC TV modes. On the NTSC version (the one we tested), the analog output conversion is processed by a Connexant chip, and it does a good job. Since the decoder can handle all world standards, it is highly probable that the same will be used in the European version for PAL mode. There is just one problem on the NTSC version: the output is a little dark. You'll have to increase brightness on your TV, and even more so with an overhead-projector or video-projector. For the European PAL version, we'll have to wait for the final console to see.
The Xbox is ready for HDTV, which is much talked about in the USA. Not only can the chip output in NTSC and PAL, but also in 720 and 1080, the standards used for HDTV which correspond to 1280x720 and 1980x1080 in 16/9. The first resolution is non-interlaced and the second is interlaced, with half as many images. HDTV generally uses interlaced 1080. You have to understand the difference between the current situation and what will happen in the future. Currently in 640x480, games plugged in through the YUV adapter on a 1080 HDTV will have a much better display because they are non-interlaced compared to NTSC. The picture is also more stable. The conversion made by the Connexant chip doesn't change quality. In the future, the Xbox will be able to process internally in 1024x768x32, which seems to be reasonable for the memory bandwidth. A game of the type mentioned above would go into non-interlaced 720 and would then be converted into interlaced 1080, which would give a really impressive picture, and anti-aliasing wouldn't be needed.
But, in view of the rate of homes equipped with HDTV in the world, games will continue to be developed in 640 with intense use of NVIDIA anti-aliasing. In current titles, if anti-aliasing is not used much, it could be better, there are just a few tricks to find for text display.