Probably the best output for your PS3 would be a BluRay disc -- although you can only burn a BluRay if you've got a BluRay disc burner on your computer. You could, however, burn BluRay files to a DVD for your PS3 if your video is under 20 minutes long by using Publish & Share/Disc/AVCHD with the 4.7 gig preset.
For viewing on your computer, I'd recommend you use Publish & Share/Computer/AVCHD with the YouTube HD preset. This will produce an MP4 that should be virtually identical to your original video in quality.
Thanks for replying. the video length will be longer then 20 minutes (about 2 hours) I have usually burnt discs in the past onto Blu Ray but now want to move away from using disc for my home videos and just have them on a media server streaming. I will give the youtube HD preset a go tonight - if this produces a MP4 hopefully this should stream over the media server and stream also.
Thanks Steve - the youtube hd preset worked out exactly how i wanted.