For $2200, you can get some pretty nice 1080p LCD's, such as the Sharp 46" 1080p LC46D62U. You should definately go view some of these TV's before you buy, however. If you want LCD flat panel, I would stick with Sharp (AQUOS lines) or Sony (Bravia). IMO, they have the best build and picture quality.
Let me just say that I own an Oppo 981, and find the analog audio performance very good. I don't know anyone whose actually done an A/B comparison of audio performance with the 981 vs. 970. The PQ on a 1080p LCD will definately be better with a 981. I'd also be interested to know what makes the audio better on the 970? Is is the DAC's?
There are other upscaling players from other companies (Denon, Marantz, etc.) which I'm sure are excellent, but they are also pricier than the Oppo's. Personally, I couldn't spend $1,000 or more on a DVD player that doesn't play either HD-DVD or BR.