If you only have a 19" screen, there is NO reason to play on 1080i.

First of all, 1080i vs 720p is a good argument. You have the highest resolution vs the progressive scan. Since the human eye CANNOT tell the difference on a 19" screen between 720p and 1080i, you should definitely take the 720p, since you will be gaining progressive scan over crappy interlaced.

I have a 37" and usually play it on 720p. Even though the 1080i is a bigger resolution, I feel like the progressive scan of the 720 is just much smoother.

Definitely go with 720p.