When quite a few of you refer to overkill what does this mean ie whats it likely to lose out or mess up on, as was also advised not to go as high as a 260 due to my lcd hd ready 720p wont cope yet i can play games at 1920x 1080 and its connected via dvi to hdmi, other than that was advised make that a limit
Just to make sure you are clear on your TV''s capabilities. It is an HD TV, there are 3 HD TV standards 720p, 1080i and 1080p. So your right, in TV terms it is nearly full HD (i.e. 1080p).
In PC resolution terms the HD resolutions translate as PC monitor resolutions as follows;
720p = 1280x720 (720 lines) @ 50 or 60mhz (or higher these days

)
1080p = 1920x1080 (1080 scan lines) @ 50 or 60mhz " " " "
Now your LCD TV is 1366x768 because its a 720p model with extra pixels to allow for overscan (google it as I want to keep this post as short as I can!)
Now you've got confused because the ability of your TV to accept 1080i input. 1080i is an interlaced signal so the frame rate is half and only half the picture is shown at any each scan i.e 540 lines. Your TV can take that signal and downscales it to fit the 1366x768 resolution. So in PC monitor terms you cannot set a resolution above 1366x768.
1366x768 - whilst good for a 32" HD TV is low by modern PC capabilities, hence you only need a mid-range card with no need for more than 512mb ram.
It's less pixels than a 1280x1024 monitor. At those resoltions you will be completely CPU limited in games performance as your new GPU would be under utilised. It wont mess games up, but anything more than £100-£120 on a 4850 or 9800GT+ would be a waste and money better spent elsewhere.
Look at this 4850 review, look at the blue performance charts (that is 1280x1024) see how the dearer cards like a 4870 and 260 are only 5-10% faster, so not worth the extra money as at that rez the 4850 pulls in great frame rates anyway..
http://www.xbitlabs.com/articles/video/display/sapphire-toxic-hd4850_7.html