Picture Upscaling. According to his tests the best option is to select 1080i and 720p in the Video Output settings - the former will be used for HD, the latter for SD channels. It should switch intelligently, but unfortunately that's where any "intelligence" ends. Ideally the TiVo would use 576i for SD and the TiVo would leave your TV or AV equipment to do its own upscaling (Virgin Media currently broadcasts SD in 576i and HD in 1080) but the TiVo doesn't actually do it.
(If you want to see how your TV or AV equipment would handle the 576i output just select that option and try a few SD channels. Not recommended for HD of course but it will give you some idea of whether it being "forced" to 720p is desirable for your set up.)
According to Virgin Media (NickO) this isn't considered a "bug", but Nick does say that they continue to look in to this issue and he will report back to the thread with a statement when it's available.