I've heard that 120hz frame interpolation magic does make console games look better... Never played on one, though. Besides that, it lets you have frame-perfect (24p, no judder) playback of movies on Blu-Ray (and perhaps over TV if the set can do a perfect inverse telecine). Not worth a huge price difference (going from 42" to 46" or 50" is far more worth it), but pretty nice.
Samsung LCD is, of course, very nice but as I said I'd consider Toshiba LCD as well. Just a step below Sony/Samsung in quality and noticably cheaper so you can get a bigger set.