Hi,
I thought of sharing some of my findings with you all, which hopefully may help to decide whichever direction you want to go. Ofcourse, like most people, personal findings also have a certain amount of personal opinions attached to it but I will try to remain as unbaised and objective as possible.
There have been several questions in this post but most center around: is 1080P worth it and at what screen size min/max is it best/worthwhile at or will 720P look just about as good on min/max screen size.
The definition of 720P
http://en.wikipedia.org/wiki/720p
The definition of 1080P
http://en.wikipedia.org/wiki/1080p
Basically 1080P contains more pixels thus, you would assume, there will be more to see in the picture content itself. As long as the screen, monitor or HDTV, can handle full 1080P, then surely a 1080P image/movie/broadcast should look 'better'. However, I think most will agree, there are 3 more important factors that influence the quality/difference between a 720P and 1080P image/movie/broadcast:
1) the source of this 1080P image/movie/broadcast - BluRay(firmware depended though I believe, hencewhy PS3 is a favourable BluRay player), HD DVD(RIP!), Compressed format content with advanced codec like H264/MPEG4 AVC, Broadband Digital Signal, ie, Sky HD etc.
2) size of Monitor/HDTV - the smallest size that can handle 1080P, afaik, are 24'' monitors and on the other end we have @50'' size HDTV, they do go higher, like the Panasonic 150'' monster recently shown at the CES 2008, it uses ultra high definition but it could also easily do 1080P, but lets stick with 24'' to @50'' monitors/HDTV as thats the majority market.
3) the distance you sit from your monitor/TV.
From my findings I have found a 4th important factor that will also influence the difference between 720P and 1080P on X size screen and that is, the actual content of what you are watching, will explain more below(see about Batch 1 & 2).
For my testing and findings I used my current Dell 2405FPW monitor and my HD-TV, bought at Xmas, Sony KDL-40X3000U. This is my setup.
Next, in order to keep the source material the same, I used Compressed format content with advanced codec like H264/MPEG4 AVC. I could not use my bluray player alas, as I could only connect it to my HDTV not my Dell 24'', so it would not give me a proper comparison. With running the material off my PC, I would run from an identical source on both the Dell and the Sony, by using DVI-DVI or DVI-HDMI leads and I could run the material on both at the same time for better comparisons.
First off I watched the material in 720P then watched it again in 1080P, sitting at a distance of about 1.5M. I also used certain paused scenes to compare 720P images with 1080P onces: Batch 1 -Bourne Ultimatum, Children of Men, The Brave One.
Results on Dell 24'', saw absolutely NO noticable difference between 720P and 1080P.
Results on Sony 40'', saw a 'minor' difference between 720P and 1080P, but only very minor in this Batch. 1080P did look very slightly better on the Sony 40'' compared to the same material in 720P.
Same test but sitting further away @5M.
Results, same as before on the Dell, NO difference.
Results on Sony 40'', that 'minor' difference had now disappeared altogether. NO noticable difference between 720P and 1080P on Batch 1.
Conclusions for Batch 1 - Make sure you sit at the optimal distance from your screen if you want to see the most from 1080P content. I would also come to the conclusion that, the larger the screen size, the more 1080P content would be appreciated if you had to sit a longer distance from the screen. IE. if I had a Sony 50'' model of the same make, I am pretty sure that the best viewing pleasure would be at 5M, where the 1080P would make the same impression as my 40'' at 1.5M. But I would presume, sitting at 1.5M infront of a 50'' would be less enjoyable then a 40'' screen. So size and viewing distance is pretty important, in this case!, when it comes to appreciating 1080P to it full.
But here comes factor 4. I repeated the same test condition with the following Batch 2 - Shrek 3, Ratatouille and Transformers. Again first sitting at @1.5M distance.
Results on the Dell 24'', there was a noticable difference between 720P and 1080P, especially on Shrek 3 and Ratatouille, not so much on Transformers but still noticable.
Results on Sony 40'', this is really where 1080P shines, the difference is significant, again mostly on Shrek 3 and Ratatouille, but also considerable on Transformers.
Same test but sitting further away @5M.
Results on Dell 24'', pretty much stopped seeing the difference between 720P and 1080P, was barely noticable.
Results on Sony 40'', the difference was still very noticable, but not as much as 1.5M but still significant. Pretty sure that if I would sit further away, alas that would mean breaking down a wall, soon enough I would stop seeing the difference.
So what do I conclude from all this, well size and distance, like we already said is important, but factor 4, the actual content of what you are watching is also important if you want to see a difference between 720P and 1080P.
Most movies, like batch 1, ie. normal recorded movies with little or no special effects or picture enchancements, can be enjoyed equally in 720P and 1080P, but only when 1) your screen size is @42'' or less 2) your sitting at the right distance for the size screen you have. I would think, the larger the screen size is, ie 50''+, the more you would appreciate 1080P, IF you sit at the right distance.
But:
Batch 2, movies that are either totally made of CG, ie shrek 3 Ratatouille Beowulf etc, or have a lot of CG effects or enhancements done, ie Transformers Star Wars 1,2 & 3 etc, their difference between 720P and 1080P is simply much more noticable and would be more appreciated on any size screen but again, at the correct viewing distances.
To me, the final major advantage, is that a 1080P screen allows you to use the screen as PC monitor, at 1920x1080 res. This is great for gaming, whether from PC or from console, as 1080P in gaming is very noticeably better when compared to 720P. Like someone said before, this is probably more of a niche useage of HD-TVs. But as the quality improves and prices drop on LCD screens, this may become more and more viable to many others especially gamers.
Some more pictures, but alas it won't really show a comparison between 720P & 1080P. But at least you can see how I compared things.
Anyways, it is a bit long winded, but I thought it would be worthwhile sharing for anyone wanting to know the difference, from my personal findings, between 720P & 1080P before taking the plunge in getting 1080P HDTV. I hope this will make your choice a little easier.
Cheers