You make a very good point. They can always increase the available resolution. I suppose the question is what is found acceptable by the end user and what displays are affordable. I say that 1920x1080 is very good for home viewing. Some other people even believe that 720x480i (DVD resolution) is totally acceptable already.

In terms of that particular picture itself, it's 970x673 in reality, and each those displayed resolutions are merely shown to scale. Therefore the detail you see in that image is, in actuality, about half as good as 1920x1080.

Digital Cinema resolution is about what you'd want if you were building a display the size of an ordinary movie theater screen, but for most smaller home displays, 1920x1080 (the higher HDTV resolution) is more than enough. In fact, if your TV is small enough, you probably won't notice any increase in quality with 1920x1080p over 1280x720p (the lower HDTV resolution).