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Enhanced Easy VPN Interface Option Selection

I am configuring an 871 as a VPN server using SDM v2.5. The Interface dialog presents two options for unnumbering the virtual template interface. The first option is to unnumber the VTI to a loopback interface. This is the Cisco recommended option. The second option is to choose an existing interface, one that terminates the tunnel on the router. I have the following two questions:

1. Does it really matter what interface you unnumber the VTI to?

2. If I choose the loopback option, how do I determine what address to assign as the loopback? I have no experience with assigning a loopback to a router.

Regards,

Rich

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