There's no interlace option that I know of. Did you mean antialiasing? It's named Font Smoothing under Options->Screen/Keyboard on the 8800. If you have it turned on fonts could be interpreted as fuzzy at the edges. If it's not on it sounds like a defective display to me. My 8800's display is as good as, if not better, than my 8700's.
Originally Posted by ETPhoneHome
Since when do phones have antialiasing?
Since at least the 8700... Antialiasing is antialiasing and can be implemented on any fixed pixel display. What the display is attached to doesn't matter as long as the system offers the feature.