Well, i have an LCD TV and I love it with my Wii and my friend's PS3 looks totally awesome at 720p. That being said, if I could get it approved by the appropriations committee (AKA the wife) I would have a projector tomorrow...lol. If you go with an LCD TV, you can probably find a good deal on a 40-42 inch model in your price range. Also allow extra funds for a stand/wall mount and cables. If you go with a projector, also budget in for purchasing or building a screen.
I'll be rooting for you to get a projector!
TWW resident bullet sponge