Keep in mind, many HDTV's have a VGA port available for use with a computer. An HDMI port may also work. I use my 42 inch TV as a computer monitor in addition to a TV with a computer dedicated just for the TV. I use it to present slide shows of digital pictures I have stored on the hard drive from my camera. They look great on a 42 inch set. I always keep my camera set to the 16:9 aspect ratio so it fills the entire screen.
1080p works well with a computer. 720p may not. Even with a smaller TV, say 32 inches, you may someday want to use it as a computer monitor.
It is true all HDTV is compressed to some degree, but the level of compression can vary based on the source. I based my conclusions from observations of my TV with OTA broadcasts vs. my neighbor's TV with cable showing the same broadcast. And my neighbor's TV is higher quality than mine.
Football games, for example, are much more "crisp" for lack of a better word. The level of fine detail is much higher with OTA broadcasts for the same program. A standard I often use is this; you should be able to see tiny blood vessles in an announcers eyes if you get within 3 feet of the TV screen. Another indication is you should be able to resolve the individual threads in an announcer's jacket. If they all blurr together, then it's not really up to the full potential of 1080p.
And yes, size matters. Below about 36 inches screen size, 720p is sufficient. But since the prices have fallen so dramatically for the 42's and above, I don't see much sense in buying anything smaller.
The best HDTV picture I have ever seen, and it continues to be excellent, is the Macy's Thanksgiving Day parade. The production is so realistic and the colors so outstanding I feel like I could just reach out and touch the performers. They must be using the best cameras and have the best production equipment available. I've watched this for several years now and every time I see it it continues to impress. The Disney Christmas Parade also is outstanding.
There are surround DVD players but frankly they often aren't great, plus they focus the DVD playback not general audio. Given that they are mechanical and possibly the last physical media format I don't see a problem in keeping it separate. The new devices are only about 2in high so they don't take up much space.
Resolution is a function of the display size and viewing distance. If the display is relatively small then the resolution doesn't matter because you can't resolve above 720p. This chart is my favourite from an EBU review:
@BoBsView: Great advice I woulod never have gotten elsewhere. Who would a thunk the Cableco would be the purveyor of mediocre video--naw, really? I love the nature documnetaries on PBS so the thought of them over the air is about the only thing thsat really drives me to 1080.
@BobDVD Sounds good--and frank-- except--can't I get a receiver with a CD/DVD player in one unit? This is the era of minaturization after all. I am not into a rack of boxes with a nest of wiring behind it.
For off-air HDTV reception, there is a neat little dual tuner device called the HD Homerun, which connects to your router and streams HD content across your home network for watching or recording on any device that can handle MPEG2.