just check below:
picture quality of HD channels in 32 to 40 inches dose not affect more by setting 720/1080 i.
but you can get the different from their sound.when you feel some surround sound comes from your tv,just change the setting between 720 to 1080.if you feel better sound compare to 720,yes they are providing 1080 or otherwise it is 720 only.
For example try with star sports HD 1 (not HD2),while they showing star sports ad or some upcoming matches ad.