...1080p might be preferable. OTOH, what is the PQ like when you do a side by side(?) There is some variation by model and make (you haven't provided model #).
I am sure this has been beaten to death, but hope for some definitive answers.
I am looking at a Samsung LCD 40" 1080p and a Panasonic 42" Plasma 720p.
It will be in a fairly small room (apartment) so people could be withing 3-10 feet of the TV.
Will eventually get a Blue Ray probably, but for now, hooking up a standard DVD, HD Cable TV, and Apple TV.