The resolution you seek is best determined by what you wish to view the file on. Since you were using the PS3 setting I thoght the PS3 was the unit being used to play the file.
MPEG4 can also be done in the iPhone/iTouch. There are other encodings possible with the mpeg format such as H.264. I don’t have the my files in front of me but to increase the resolution and remain in mpeg just increase the video bit rate.
Remember depending and what you plan on viewing the file in is important, since an increase in resolution does not always mean an increase in quality. The video quality is dependent upon the display device as well. For example a video encoded at 1800kbps is a better resolution than one encoded at 900kbps, however if you play them both on an iPhone you simply can’t tell the difference. Other than one file is a lot larger than another.
My DVDFab is on my home computer, and so are some of the files I have played with to see what the best resolution for me would be. I will have to look at those to give you my answer, unless somebody else answers you first. What do you plan to view this files on?