I just found this thead, but let me jump in with my 2 cents..

I got a Toshiba 55" HDTV for $1800 delivered.. You could go with a 50" model for a hundred less, or a 42" model for about $1500. Or pick up a leftover of last year's model for even less! HDTV is the only way to go, even if you're not getting a high-def signal just yet. The viewing range on the Toshiba is quite wide - I've got a chair at a 45 degree angle from the set and the image is still crystal clear. I can't find the specs offhand, but I believe they said the image is fully viewable up to 60 degrees before you start losing clarity. Bang for the buck, I think Toshiba is really the way to go. If you find a good price online from a less-than-reputable online vendor, you can usually do a price-match with Sears, with just a printout of their website pricing. Save yourself the headache, as going through the internet on a purchase this big is a real PITA. I learned the hard way. Especially bad when something arrives DOA. I've had nothing but good experiences with OneCall, FWIW. I got my DVD player and some of my speakers from them.
As for the home theater part, do it piece by piece, those home theater in a box deals sound like crap. Even my buddy's $1000 Denon HTIB is pitiful sounding, and has no digital coax input (which sucks since our cable boxes only output digital coax). I didn't go the DIY route, but picked my components carefully and put together a quite ridiculous setup for about $2500 ($2700 if you include the DVD player). But you could still get an amazing setup for ALOT less. (Receiver, 5 speakers, subwoofer) I just decided to get the best I could, so I wouldn't have to upgrade down the line.
Check out the links APT posted, those are the major HT boards and you'll find more info than you'll know what to do with.. Enjoy, but be forewarned that it becomes a real bad addiction real fast. I'm having my set ISF calibrated by a "super-tech" next month, who basically tricks out my set similiar to how we trick out our cars. Not cheap, $450 for 6-8 hours of work. But it's supposed to be amazing.