Todd provided a good link to explain things, but there really aren't any hard and fast rules. It depends on what you're expected to deliver. You may have HD footage, but you need to deliver an SD file, for example.
Here's another example: I work a lot with DVCPro HD footage shot at 720p 60. It has a wide pixel aspect ratio of 1.33 and a resolution of 960x720, not 1280x720. You'd think I'd work in a DVCPro HD comp preset using that pixel aspect ratio and resolution, right?
I work in a 1280x720, square-pixel comp. AE knows how to interpret the footage, so it looks just right in the comp. Furthermore, because it's a square-pixel comp, circles remain circular and squares remain square. Text looks nice 'n smooth all the time. Life is good. I can also render back to DVCPro HD from this comp. That's because the codec defaults to rendering 960x720, with the same pixel aspect ratio as the original footage.
So it all depends.