The room size is 15ft by 12ft, budget of $1000. Ill be sitting roughly 6ft away, its a little small for a projector. I do plan to play video games, but not that much. Because its a small space that Im working with I am interested in a flat screen.
I know that blu-ray and HD are going head to head right now, I only picked HD because that is what I am familiar with. Just like anyone else out there I dont want to invest in one just to have it become the next betamax.
With that being said, thanks for the replies.
6 ft. viewing distance is probably too close for a front projector. For $1000, i don't think you can do any better than the
Panasonic 42" Plasma right now. Many places have it on sale for your budget price.
Look around however, Sharp has a very good PQ if you would rather go with an LCD. Bottom line is you want to go somewhere that you can actually view TV's you are interested in (preferably in an A-B comparison, and where you can play different kinds of source material).
For your DVD needs, It seems that Blu-ray has taken an early lead based on sales, movie studio deals, etc. However, that is no guarantee that it'll win the format war. It looks like there are some dual format (HD and Blu-ray) players on the horizon if you want to wait for that. Or if you want to stay out of the format war for now, you could always get an upscaling dvd player like the Oppo DV-981HD ($230 or so). There are many other as well, however, owning the Oppo, I can vouch for it's quality build and good PQ.
Good luck with whatever you decide to do.