1080p better
1080p is definitely much better, but the economic justification for it is weak. It will be a good three years before anything remotely significant can utilize it. Even the HDMI standard has not been completely ratified yet.
You are probably better off getting a good 720p set until there is enough media and content for a 1080p set. Having said that, as some have said, if you're interested in a projector, 1080p would be a good choice. I know Sony has a 1080p projector selling for $10K. I would definitely get that, but for me personally, I'll wait till it hits the $3K mark before making the purchase. By that time, cable/phone networks will start to deliver 1080p content and perhaps the Blu-Ray/HDDVD mess will be worked out.