The definitive screen size/resolution/distance chart, based on the tested limits of human eye resolution:
http://www.soundandvisionmag.c...ng-out-resolution.html
To pull a few data points:
If you are sitting farther than 10' from a 50" TV, 720p is enough.
If you are sitting farther than 8' from a 40" TV, 720p is enough.
If you are sitting farther than 6.5' from a 32" TV, 720p is enough.
If you are sitting closer than 6.5' from a 50" TV, 1080p is NOT enough.
If you are sitting closer than 5' from a 40" TV, 1080p is NOT enough.
If you are sitting closer than 4' from a 32" TV, 1080p is NOT enough.
I think that in most situations, 720p is plenty good enough, for reasonable screen sizes. We have a 32" and sit about 8' away. I think that a 40" would be uncomfortably large, but a 720p 40" screen would still provide more resolution than the human eye can resolve at that distance. When you start looking at projectors (80"+ screen size), and fitting them into a normal sized room, I think then you will have to take 1080p seriously. But, of course this is all dependent on your individual circumstances. The charts just tell you what's reasonable and what isn't. You can over-spec if you want to (hey, this is AT right? Home of the 200+ FPS gaming rig...) and of course there might be times when you sit closer to the TV, for whatever reason (laying on the floor, etc.).