diagonal size will disappoint. Fortunately you indicate you have a budget to get what you want. The wide aspect will nearly always result in black bars above & beneath the image. That is wasted space we have to pay for. If not familiar with this spend a bit of time at a TV showroom.
Things that have changed include that at first 42" became the "standard" size. I remain with that because I bought a, at that time huge cabinet to enclose it. If without that constraint, seriously consider about a 50" model. It has become the new size of choice.
An additional factor comes with that. It is at 50" & above that the difference in resolution between 720 & 1080 starts to become apparent. If wanting to be state of the art, future proof, a big fan of BluRay DVDs, or a serious gamer - go for 1080 resolution. If not & perhaps sticking with smaller diagonal size than 50" or so, you can save some money with a 720 set. 720 is so much better than 480 that it provides most of the "punch" of HD.
Additional rules of thumb that come to mind are that, even though the makers are pushing LCD set now, plasma may be the choice if you can really reduce glare in the room & is cheaper than LCD in the larger sizes. LCD is brighter so a better choice in bright areas. It still have a cost premium over plasma in the large sizes. Also, a plasma weighs substantially more & uses 3 times as much electricity as LCD.
One lucky strike is that you live with the broad exposure to buying resources on the big city. If you have been away from the A/V scene for awhile, a good introductory article to read was in the Feb 2008 free online issue of playback mag. Bookshelf speakers under $1k. Check it out at: http://magazine.playbackmag.net/playback/200802/?u1=texterity
There are hundreds of brands of speakers. No list can be perfect; this one is a good as I've seen. You will also need a power source, usually a receiver & folks read the advertising & often overbuy - more receiver than they need. Nearly all the sound difference is with the speakers so we like to maximize the budget there.
The discipline of building the parts yourself allows starting with just two speakers to start & adding compatible ones for surround later. My strong recommendation will require a worthwhile investment in time to select what speakers will do best for you over the long run. Everyone has different ears. A bit of formal listening of a couple of CDs you are intimately familiar with which have substantial vocals. Rock 'n roll is a bad choice because they are mixed without logic.
Vocals are mid range but surprisingly difficult to reproduce well. Trust your instincts. If you think you just heard distortion, you did. If vocals don't sound fine don't even extend your concern to highs & lows. Take elementary notes as confusion comes so easily.
Please post back for more specific guidance.