Congrats on the purchase on your first home. Since you've narrowed down your search to a specific type of tv, the choices become a bit easier. Now you're simply torn between spending more cash or not.
Let me put it this way, The more resolution you have on a given tv set, the more detail you will see. Though this isn't necessarily true for every DLP, for the most part it is true.
Now, I'm sure you're familiar with the new formats HD-DVD and Blu-Ray right? Well, these formats will output in 1080p (in a perfect world). So having a tv that has a native resolution of 1920x1080 will be able to display every detail a given movie presents in either of the formats above. With that being said, if you have a tv with 720 max resolution, it will simply enhance the picture you're seeing, as it can't give you all the details because its resolution prevents it from displaying more.
The downside to having 1080p you ask? Well, if you have analog cable and do not and will not ever have hd service, then the picture is not going to look that great because the opposite happens with regards to the previous paragraph. What that means is that when you look at regular cable on a 1080p tv set, it's going to look as if you were pulling tv stations on a regulat crt tv with rabbit ears. the picture is going to look a bit distorted because of the extra amount of resolution a 1080p set has simply because regular cable or off air tv runs at about 480 in the best conditions. This is where 720 will look better and won't "degrade" an analog broadcast as much.
Personally, if I were you, I would spend the extra money into a tv set that can take a 1080p input. Aside from the size restrictions, if you decide to for with a 50" for example, go with a 60". The reason why is because you can always go a size down but it's harder to spend more money as opposed to getting money back if you thought the tv was simply too big.
I hope this helps
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