I've been there too, and after researching for quiet a bit googling on LCD vs Plasma, and a lot of electrical shop visit here is what I learn.
i ) 720p = HD Ready, 1080p = Full HD.
ii) If less than 50 inch , 720p is suffice, save you hundreds of bucks too. sauce :
http://reviews.cnet.com/720p-vs-1080p-hdtv..._content;rb_mtx iii) Plasma is better in term of colour vs price. A more expensive LCD TV will match contrast ratio/ color vividness of Plasma however cheaper LCD(same price with Plasma with same size) will have grayish black area, esp when viewing in dark room.
iv)Full HD is good if you plan to use the TV as a PC monitor, the fonts will be more clearer. For Xbox and PS3 720p suffice as most of the wording in larger font.
Its best if you go to shop and check out urself, make sure the video sauce is highest quality and compare the two models. 720p vs 1080p aside Check out the features too, e.g how many connector, if you have PS3 , XBox360 and a PC connected to it, you might want to check how many HDMI and other connector port available.
Sidenote: LED is damn awesome.. too bad its a bit too expensive, waiting for it to drop in 3k-4k range.