Buying advice needed

I'm still a bit new here, so if this is in the wrong place to post this feel free to move/delete it.

I'm in the market for a new TV, as I've finally lost it with the tiny portable CRT that has been in my room for God knows how many years. So I'm looking to get a new TV, but I'm unsure whether to go expensive and buy a nice HD (probably LCD) set or go for something more affordable.

Here's what I'm going to be hooking up to the TV:

TV through standard RF connection
Nintendo Wii (either through component (unlikely on a CRT I know) or RGB Scart)
DVD Player (through SCART/RGB)
PS2 (probably through composite input)

Now I have some questions:

1. Am I right in assuming that my DVD player would look rubbish on an HD set without buying a new cable/an upscaling DVD player?

2. On a screen size of size 24-26", will Progressive Scan be a noticeable improvement over an RGB signal?

I'm just looking into this as I grudge paying £500+ for an HDTV solely to take advantage of a slightly better picture on one of my inputs (the Nintendo Wii is 480p compatible), when I can get something like this (http://tinyurl.com/pnhwq) for £130, and would allow me to connect everything I want. The fact that I also have no plans currently to invest in Sky HD or an XBox 360/PS3 also puts me off an HDTV, despite it being more futureproof than a CRT. I'm still undecided however.

Thanks for the help.