well from a blu-ray source, x264 (720p) is CLEARLY superior to ANY DVD. (typically 4.7GB or 7GB or 8.5GB ... those seem to be the standard sizes for 720p [x264] films. i think general length of film generally dictates what size is used but i dont know details. but i would assume any film around 1hour30-40minutes is almost always 4.7GB where as anything 2hours or a little more is 7GB and longer films are probably 8.5GB. that should be a general ball park figure.... and also, audio is usually converted down to around 640kbps on 4.7GB stuff. and most of the time it's converted down to that bit rate on almost all 720p films although some use the exact audio track from the blu-ray)
and from what i generally hear... 1080p (especially on longer films) 8.5GB is a tad small.... but strictly speaking 720p what i said above is a pretty close figure to what you should use. (for the record i never encoded any 720p x264 stuff myself as im going by what i know from other sources )
basically on my 19" monitor which is running a screen res of 1280x1024... 720p is clearly superior to standard dvd format... and i dont see any reason it would be different on other higher end monitors.
it's just that simple... if it's not then your not using a high enough bit rate.