Although it's IPS LCD display on the 720, the L800 has AMOLED display, so the washed out colours are normal to be on the 720 . Adjust the colours in the Lumia Colour Profile in display+touch settings section.
Display technology does NOT determine the color gamut of a specific display, only it's backlight (and partially color filters) determine the color gamut. The more narrow the wavelengths of the RGB components of a backlight is, the higher the gamut ("saturation") becomes.
The 720 display is set to meet the color gamut close to that of sRGB, while the AMOLED display found in 800, 810/820 is set to meet.... eh...... unfortunately nothing.
What you're seeing are boosted colors which are not supposed to be boosted, exactly as using a cheap desktop monitor with a "wide color gamut" and without color management that were popular a few years ago.
The problem with the AMOLED that is used is that it doesn't cover any specific standardized display gamut, while Microsoft always design their OS'es with sRGB color space in mind. They (and most others) do this because they want users to experience the same colors on any device and sRGB is/was a color space that was obtainable for most consumer CRTs and LCDs, unlike NTSC for example.
It will hopefully be changed to AdobeRGB in some years time since display technology has advanced, but it won't help the 8*0 AMOLED much since it doesn't follow any standard.
If windows phone did use display color management, then the 720 and 800/810/820 would look completely the same in the main UI, provided that someone at Nokia would provide a display profile for their non-standard gamut display. Until then, you won't be able to rely on the colors that wide gamut displays produce on WP. I.e. the saturation of photos will look high on the display, but look natural on paper.
And no, it's not that I am jealous of not buying an 8*0, it's just that the manufacturers are running this stupid "what kind of crazy saturation" can we achieve to attract attention in-store attention, just like they did with desktop monitors some 5 years ago. Luckily some manufacturers got fed up.
well though I agree with oversaturated vs natural talk and wud prefer natural anytime but then a black should be black for me but its real black only on 800, 720 still seems greyish which is odd considering Nokia famously markets its blacks'
That's true. LCDs can't display black as pure black (as in no light emitted) like OLEDs can. The "ClearBlack" technology is the addition of a special polarizing sheet applied to the front of the LCDs which decreases the intensity of "black" at steeper viewing angles. I.e. it reduces the typical IPS screen white glow of blacks seen at steeper viewing angles. I don't know if this is really a Nokia invention, since NEC used in on select desktop monitors in 2007-2009 under the term "A-TW polarizer".