a 1080p picture will look sharper, but not necessarily have better picture quality. Factors such as tv size and viewing distance also make a difference to the overall viewed picture.
I would say that 1080p isnt critical if your viewing at 40" or below. You'll be better putting more of your budget towards better PQ rather than extra pixels. If you going above 40" then the resolution jump from 720 to 1080 will be a fair bit more noticable, but again I would say dont get wrapped up in the the resolutions as this doesnt guarantee a high quality picture.
If you have 2 tv's of say 40", and at the same price point, its highly likely the lower res tv will produce the better picture by having better colours and processing (which leads to smoother delivery of moving images).
You also havent said if your going to be opting for LCD or plasma.Your going to pay a bit more for a 1080p plasma, but the results can be simply stunning.
My advice would be, if your looking at 40" or below, dont get wrapped up in 1080p. You can see a difference but its not enough to warrant the extra price, or cut in quality depending on how you target your budget. If you find a good tv your happy with that has 1080p then all the better, but you need to make sure your also looking at things like contrast ratios and for LCD's, response times that are quick. If your looking to go above 40" then personally I would go 1080p, but this is only going to make a huge difference on something like a Blu-ray movies (if your into your movies though then its deffinatly going to be worth it). Console gaming wont show as good a result due to the fact consoles only really ever do 720 native and anything higher is upscaled.
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