See if you look at close up then there is differnce but if you watch movies from say 8-9 ft (like I do) you'll not see any difference. And yes from that distance both 720p and 1080p looks same, even dvds look good.
Most lcd tvs below 37" would scale down the 1080p to 720p resolution as they don't support full HD (1080p). But if you get 37" or larger tv then, yes the picture is better (since most tv's use 10-bit panel compared 6/8-bit for monitor) but you have to sit at a distance to view it. Any display that supports Full HD will show it to its full capablity, baring that you have the hardware to run it.
Just bargain like you would do at your local store, else if you know that some has got the same model for less (than your qoutation) give them his/hers reference and you should be able to get down the price.
In my opinion I would get the biggest display that comes within my budget and also the monitor should have most inputs possible, like S-video, composite, component, HDMI, VGA etc.
