It's easy. If your telly supports PAL60 then that's the best setting to use. Err.....except when it's not.
Some games seem to work well in PAL60 (like Project Gotham and JSRF), but not others (like Halo which looks jerky). I think I'm right in saying that where the developers have gone to the trouble of doing a proper PAL conversion then PAL60 won't look good, but there's no labelling or anything that will give you a clue.