PS3 Blu-Ray DVDs wont display in HD

"Many games made for 1080p won't scale properly to 1080i, and sometimes 720p. I'm having a huge issue with Blu-Ray movies. It shows as 1080i (even though I have my HDTV setup as 720p in the Media Bar), but it's very grainy and looks like standard DV

Sony says this is a "known issue" and is "working on it," and perhaps there will be a firmware update in the coming days (read: months)...Can Sony blow this thing any worse? I mean..come on! One of the most highly touted functions doesn't even work!