Just as an FYI, Projector Central has forums - but I tend to chirp in on abut 50% of the conversations there as the moderator there and an even longer member here, so if you have any projector questions feel free to ask them here or there - or both. I'll ignore you in one of the places most likely.
What isn't really covered in a lot of places is the feeling you get when you go into your own area of your own home, apartment, condo... whatever - and you fire up a home theater that could be in your living room, or a storage area - but it rivals what you get from the local $10 a visit movie theater.
1080p projection often is the equal, if not the rival, of the images projected by film theater. 720p looks stellar, and is good for those on an absolute budget, but in general, I would steer people towards 1080p these days as it is easy to get it for right around $2,000.
The room you have is what you use, and the biggest requirements are to set your expectations. You don't go into a theater and have them turn the lights up, so don't use a room in your home with lots of lights in it. If you do have a room like that, get the light under control. Black out windows, get directional lighting... and beyond that, a bit of audio is required as well.
Generally, you will spend as much, or more, on the audio as you will on the video.
It is better to go with a bottom of the line junk system, or not buy at all, then to use your entire budget on the wrong stuff. That is, if you need a screen, and it MUST roll up, then get a tab-tensioned screen. These screens, from reputable manufacturers, tend to run at least $1,000 or more. But, cheap manual roll up screens can be had for under $100.
The best tend to be permanently tensioned screens which hang on walls like paintings. They are under $1,000 for most sizes and can last you a lifetime if cared for properly.
Projectors tend to be a disposable technology. That is, like all electronics, they can have electrical breakdown. Unlike most electronics though they use a very bright, very hot light bulb inside of them right next to all those electronics. It shortens the life of the product - generally to about 10 years or less. Extended warranties aren't really the worst thing you can get for a projector if you intend to use it heavily - especially lamp warranties.
When thinking about your home theater, make sure to cover everything and to ask lots of questions before doing anything at all. Lighting, cabling, conduit, seating, painting, carpeting, ceilings, remote controls, equipment placement, equipment, projector, receiver, sources... It all comes into play and can seem pretty daunting (and is) when you don't take the time to go through things one by one.
If you have the time to sit down and learn and want to put forth the effort, then the entire list can be answered through articles like you see here and on other websites, as well as follow up questions in forums like these. Some forums will get your more audio answers (here) others may get you more projector specific answers (Projector Central), while others may drown you in technical hell - (AVS) - which is great if you have a super tech question... maybe.
Room size almost doesn't matter as I've heard of people working in 8x10 rooms and 35x20 rooms and every size between.
The really common scenario is the 'rec room' or 'media room' which is in a basement next to the pool table and card table. It all works and is great fun, especially for game day and movie night - if you plan for it.
For lighting examples (not sales) I always recommend people go to
www.avintegrated.com/lighting.html as an example of what proper lighting can accomplish on a 106" family room setup screen with about 500 (or less) lumens actually in use. No Photoshop used!
