Assuming your TV will support 720p signals, check how you have the TV connected to the Playstation 3. Change your video cable to component video or HDMI, depending on the TV. (The Composite input is limited to 480i (SD) pictures. The same is true for a SCART connection.) Put the TV to the new input by pressing the Input Source button on the TV Remote or through the menu depending on your TV.
You may have to do the first of these steps before changing your cables and the TV input source (I'm not sure). On the Playstation, select Settings and then Display Settings.Choose your video output (component or HDMI). Next select all resolution that the TV can use. (Most 32" TVs only do 720p. There are some that can do 1080i or 1080p.) Confirm the video connection works. Then Save your settings.
For screen captures of the steps, see:
http://manuals.playstation.net/document/en/ps3/3_15/settings/videooutput.html . You should always turn off the TV and the Playstation before swapping the cables. (So you may need to stop and save after setting the output to component video. Then return to the Display Settings menu.)
I hope this helps.
Cindy Wells
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