Definitly go with a 1080p set. To get anything less now is like buying aging tech. Although most TV programs will be shown in 480 - 720 for a while...some are already 1080 and of course if you plan on getting a Blu-ray player you will HAVE to get 1080.
Also I gotta tell you, since I learned the hard way, if you go to the store and look at their Blu-ray setup and think "damn that looks so friggin smooth"....it's not the player (well it is higher rez which helps) but the real kicker is the TV has to have 120mhz filter. Most have only 60....like mine.
So yeah, when I bought my Blu-ray and LCD TV setup...it didn't look as good as it did in the store, but they won't tell you that and nobody seems to have info on it when your making the purchase.
As for the size of the TV, I have a 46" Sharp Aquos and it is pretty much the perfect size for my living room (which sits 5). If I get another in the future it will probably be no larger than 50". The larger you go the more the image will be blown up and the more pixelation you will see. So for 1080, 40-50" is perfect for an amazing picture.
As for brands, I'd recommend;
Sony has probably the best picture out there but you'll have to take a second mortgage out to pay for it. Very much overpriced but they know they have the best.
Sharp is also a great brand and their prices are competitive. Again watch for the 120mhz filter as most don't have it.
Samsung is ok, I haven't had the best experience with samsung products but they do have good picture quality.
Vizio, surprisingly has gotten very good reviews dispite the walmart price tag...really cheap and apparrently good TV's if your on a budget.
One more thing. If you buy the TV in the store they will talk you into buying the $100 monster HDMI cable for the TV. DON'T, it's a huge waste, if you go to a site like www.meritline.com you can get them for like $10 and it works the same. Same goes for the wall mounts, if you get them at a store you'll easily pay $100+ for them, buy online and you'll pay half that.
The only two cables you can use with a 1080 source (like Blu-ray) is DVI or HDMI....so prepare for this.
Also, your regular TV channels will look like **** so don't be alarmed, you'll want to get the HD package from your cable company or DISH network.
That's what she said...