I used a good 24" SDTV for a few months on my Xbox 360 with s-video. Most of the games looked extremely good and hey, they were still fun. They definitely look superior to PS2.
So yea, it's worth it, as long as you want to play the games. Some games (most famously Dead Rising) are near-unplayable on SDTV, though. It's also conceivable you will be at a disadvantage in online but I am sure a lot of people kicking my butt online are on SDTV.