So what about 42" tv's?
I'm going to get a 42" one shortly and have only SD sources just now and probably only will for some time.
I'm not bothered aboout Blu-Ray, can't ever see me getting Sky and Freeview HD doesn't come for a while and even then only 4 channels.
So, am I selling myself short by going HDReady just now rather than FullHD?
I'd say future proof. The thing is, at least for me, is that Blu Rays are now just as cheap as DVDs if you shop around, so there's really no reason NOT to buy them instead of continuing to buy DVDs - and a decent Blu Ray player will upscale your DVD collection which will look better than just playing them on an old DVD player on the same HDTV - since you're getting a copy of the film that looks (and often sounds) superior on a large panel compared to the DVD version. I put off buying DVDs ages before I even got a new TV and BR player because I'd seen things like Transformers on Blu Ray on my mate's 50" and knew I'd just end up wanting to replace anything that I would have bought.
I only have a 40" but the difference between 720p and 1080p is obvious to my eyes from the viewing distance I use (which is sort of the point; nice big tv you can sit near for films because the res is high). On a 42" even if it's just HD Ready, SD can look pretty dire when it's not a good source because you're ultimately still blowing up a small image to a large size. It looks worse on a 1080p set but it's hardly pristine on a 720p set either. On my parents non-1080p 32" it's fine, because it's not really big enough to really show off Blu Rays and they don't sit right in front of it, but 42" is noticeably bigger:
Visual TV Size Comparison : 32 inch 16x9 display vs 42 inch 16x9 display
The TV will probably be the most expensive component in the 'video' part of the chain, so you should go the whole hog so that when you eventually do get HD sources (and BR players are getting cheaper, some TVs come with Freeview HD built in e.t.c.) you'll avoid any upgraditis you might get if you went HD Ready now. Most people typically don't replace their TV willy-nilly so you might as well get something that will last a few years. I don't know about you but I hardly watch anything that's not on one of the main channels, which now all have HD versions and will no doubt become the 'default' versions of the channel in time.
The other obvious thing is, how many of the decent brands still make non-1080p panels? The only ones I've seen lately are the really woeful stuff they sell in Tescos!