You don't need a new projector if the one there is already one you are happy with. Project it onto a white wall and make that determination yourself. Also check
www.projectorcentral.com for specs and reviews. Remember - a new bulb in a projector is almost as good as getting a brand new projector. My projector was looking really bad - then the bulb blew... put in a new bulb and it looked ten times better than just before the bulb blew. Fantastic!
If you are paying someone for a screen at a retail store, then you will likely be recommended to Stewart and their premium stuff. They are really expensive, but put out some top notch stuff. The screen almost seems like overkill for that projector though. A Da-Lite may cost half as much and serve you just as well. You mainly want, if you can do it, a permanently mounted tab tensioned screen.
Your viewing distance should be about 1.5x screen width minimum. You can get closer, but will pay the price in quality. If possible, try bringing your projector into your local store if that is where you are getting a screen from if THEY have a screen they should have no problem hooking a source to your projector so you can do a little experimenting with screen size and viewing distance.
Remember, HD is the BEST your projector can display - it gets much, MUCH worse with regular TV and VCR tapes. DVD should look good though and probably should be your test material.