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Best/Recommended Settings for Xbox 360 Connected Via HDMI?

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I just bought a Belkin HDMI cable for my Xbox 360 (Slim) and am using a 26 inch Insignia HDTV that supports 1080p. I’ve been using the HD cables that came with my original 360 back in 2005, but felt like getting myself an upgrade.

But now I’m a bit perplexed as to which settings I should use since, once I switched to one of my HDTV’s HDMI channels, the picture quality on the 360 Dashboard looked washed out (as if I had it set for SD in 480i resolution). I’ve been looking around at my Xbox’s settings, selecting “Optimal Resolution” from the HDTV Settings (which it automatically sets to 1080p) and have the Reference Levels set to “Expanded” (since I bought my HDTV within the first 3-4 months this year).

But where I’m most puzzled is what I should select for HDMI Color Space. There are five choices available to me: Auto, Source, RGB, YCbCr709 and YCbCr601. Given the description(s) given for Auto and Source, I decided to select “Auto.” But looking at YCbCr709 and YCbCr601 in the Dashboard, the color and sharpness appears very notably greater and pronounced. I did decide to watch a few minutes of Ratatouille, and it looks good. But when I put Forza Motorsport 3, it looks like the Dashboard quality (bright and less-than sharp).

I put the settings on YCbCr709 and Forza 3 looks sharper and closer to the great, peak quality I got with the HD cables on 1080p (admittedly grainy/pixelated, though I’m not sure if that’s a result of my console/HDTV settings or the game itself) while Ratatouille still looks great too. So, I’m inclined to keep the settings on that for Color Space, but is that ideal/recommendable for both games and movies (since the description given for YCbCr709 is that it’s meant for high-def movies, but doesn’t say anything about games)?

This might seem silly, but I just want to get the most out of what I have available to me.

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