I have to agrre with Luthien's comments on the issues concerning projector vice projection.
As far as size of screen/impact goes, you can't beat a projector. Go to your local theatre (one that is considered to have a good quality picture) and examine the picture. Actual movie theatre picture quality isn't too hot. What you do get out of it is impact! I have a 7" diagonal portable dvd player, a 20" computer monitor, a 27" direct view tv and a projector set up for 7' widescreen diagonal image and all have their benefits and faults.
The lcd 7" widescreen image on the portable is actually much better than you would think considering it is so small. The viewing angle isn't too bad actually and having it hooked up to my 1200watt rms stereo system in my jeep on family trips is a lifesaver for my wife and I and the kids. This is a very small screen but hooked up to a monster sound system changes alot of things as far as impact goes and how "we" percieve things.
Moving up to the 20" monitor sitting in front of the screen only 2-3 feet away with a home theatre type 400 watt sound system hooked up has its own type of impact. Now I'm stationary with pretty good sound and an incredible picture (better than any other in my opinion due to monitor resolution).
The next setup is 27" direct view tv with a1200 watt sound system in the family room and also a 27" direct view tv in our bedroom with 200 watts of power. Difference between the 2 is tremendous for obvious sound reasons (impact) but there are many other factors such as I get to lay in my bed to watch a movie vice on a sofa less intimate. Screen size is the same but comfort takes priority.
Last we come to the home theatre setup in the basement where it's pitch black. 7' widescreen with 1500 watts of power (including 3 subs) picture by projection dlp system. As far as impact goes, no comparison. Leaving sound out of it, sitting back watching anything on a sceen this size takes everything to a whole different level. When I was looking at going "big", I stood back, took an honest look at what was out there and then using my wallet as a guide (not everyone's a millionaire), I bought what in lite of much internet homework at reputable sites and home theatre stores was the most bang for my buck. I have not seen a picture this big yet for what I paid that can compare in overall impact bar none. Could I have been satisfied with my neighbors 57" widescreen projection tv? Absolutely! Does he have a great sound system for his system? Absolutely! Why does he come to my house when he really wants to see something bad? Impact!!! The difference between a 57" diagonal image and 84" diagonal image has to be seen to be appreciated. My sister has a $6000 60" lcd sony and for the money, I could have bought 6 of my ..... you geussed it.... x-1 projectors. Is her image quality better? Yes, but the difference is not significant enough and absolutely cannot come close to making up for the difference in size! Does she have a viewing angle issue just as EVERY projection tv out there does? YES! When there's alot of people over watching a movie, you can't beat being able to seat people at any angle in front of the picture.
Now, I use my system for dvd movie watching and my son uses it for xbox. I do not use this system for tv other than us as a family watching "survivor" using a standard composite signal. Is the picture quality of a projection tv better with hdtv than my projector? YES! Does that concern me? No! What I am getting at is you need to really look at how you are going to use the system and what really matters to YOU! Whatever you do, it is a personal choice that YOU must make and to "heck" with what the rest of us think! I would warn you to really think about this before making a purchase though. The impact that my system has on people who come over that have a big sceen tv is they are SHOCKED at what they paid compared to what I payed and cannot believe the picture quality for that size of a screen! What I hear countless times is "I can't believe how good that looks", "I can't believe what you paid", Why would anyone want to buy a projection tv when you could have something this size for so much less", and especially "how come noone ever told me about what a projector can do". I've found that peoples perceptions of projectors goes back to the days where there was this giant box sitting on the floor with 3 colored lights projecting an aweful picture on a sceen that looked like a tv or they think that a projector is out of their price range and it's a toy of the rich.
Can't believe I wrote all this out for you but I can't stand to see people make a mistake because of poor information or lack of information. You will have to spend more for a projector that has a dvi input if you need one because you watch alot of tv or that is what is important to you. However, for about 2000 you can easily enter that arena and that's what you were looking at spending anyways.
Bottom line is do yourself a favor and LOOK at projectors BEFORE you get a big screen projection TV!!!!! Then you can make the best decision on what is really important to YOU and what you are going to use it for.
Best of luck.... Pete