I have a home theatre setup, I have an Epson 1080p LCD projector which looks really amazing and has basically no input lag, hooked up to the PC via HDMI, I throw a 125" screen with it which fills the entire internal wall in my living room.
The audio goes through a home theatre system which simply does passthrough HDMI on it, it's a 9.1 surround sound system with tallboy speakers which flank the projector screen and look really nice and sound amazing.
The PS3 is also plugged into that system, I borrow my PS3 dual shock controllers and use a USB bluetooth device to pair it with the PC and then use the motionjoy drivers and configure the input, often it's good to use Xbox controller emulation as an option so that it's 100% compatible with games built for the Xbox controller which is quite a lot of modern games (due to the now defunct GFWL)
If you're going the projector route I would HIGHLY advise you visit somewhere like the AVforums and speak to the experts there and learn absolutely everything you can about projectors before you take the plunge, how to calculate max screen size, what features you most want, how much replacement lamps will cost, which have good input lag, how to control light sources in your room, what kind of max contrast and brightness is best for you, what inputs you need, whether you go DLP or LCD, what refresh rate you want, cabling, noise and heat, room positioning, if you're using lens shift or keystone correction....only when you can answer all those questions should you take the plunge on a projector, especially an expensive one.
Doing it properly is an absolutely amazing and second to none experience that you aboslutely wont regret, not just for PC gaming but console gaming and movies, I watch all my TV and movies through it as well and it looks amazing.
My specs are in my sig but the projector is an Epson 3200TW I believe, and the sound system I recently got was this bad boy
http://www.lg.com/uk/home-cinema-systems/lg-BH9540TW