You might want to look into rear projection televisions, you could get a much larger screen for your money than you would with a flat panel (search Google Shopping).
Regarding 1080p versus 720p, you will pay more for 1080p, and you can only see a benefit at screen sizes over 50 inches. Also, most PS3 games are still in 720p (and some are actually lower than that and are just upscaled to 720p, such as GTA4) so I wouldn't obsess over getting a 1080p TV right now. 1080p is being offered more than before, but if you can find a 720p TV it will be cheaper.
Your wireless router should have at least four wired ethernet ports on the back, so you would connect to any open one. Just don't connect to one labeled "WAN" (that's for the modem) or "Uplink" (that's for an additional router).
If you want to connect to the router downstairs, you can use ethernet cabling, but your parents will probably not want to see a cable laying in the hallways. That's why wired connections aren't as popular, because people don't want to have to install cables in the walls of their house. I live in a one story home, so it wasn't a big deal to drill up from the basement, and I prefer using the wired connections now (more stable connection for gaming and a higher speed for media streaming from my PC).
If you need a lot of cabling, buy a bulk spool at a renovation store and some cable ends. It's much cheaper than buying premade cables.
You could also connect to the router downstairs using a powerline network kit instead. With that you would plug a powerline adapter into an electrical outlet in your room and another one in the room with the router. Then you connect the PS3 and the router to the adapters using standard ethernet cables. But you would probably want to research this first, in the past there have been complaints about their reliability when it comes to gaming, and some systems have to be rebooted periodically which is a nuisance. Maybe they are more reliable now, I've never used one.
Option number three? Have the cable company relocate the modem to your room, and put the router in there. Maybe the downstairs PC won't mind the crummy wireless connection as much (gaming relies more on stable two-way communication than web browsing or email does).
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