The best advice I got from a friend who works for Futuremark, when I asked about this sort of thing (texture size/polygon amount) he said, sure you can make a super realistic vase with millions of polygons and shading and all, but make it cool and out of 100 polygons with the smallest texturemaps and then you are impressive.
I think Xbox can do 1024x easily, BUT if you can make the same results with 512x and make it look just as good, then you are on to something.