Personally, I can't see the difference in a 120hz or a 60hz hdtv.... IMHO 120 is a marketing gimmick. Beware that when you are looking at one in the store that looks great, that it doesn't look better than a 60hz just because the way they have the two sets dialed in. Some reviewers agree that they can't really see a difference. Regardless, the source is 60hz (24 hz for anti-telecined movies on BD) and jacking the freq up to 120 (doubling or pentupling the original source) is only as good as the motion smoothing hardware/software employed.... personally, I am not a big fan manipulating the source material, I figure the director wants you to see something one way, and who the hell am I to change his vision... that is why I HATE colorized movies and dislike movies that have been "over smoothed" during their transfer to BD.
What size are you looking at? Until you get up over something like 50 inches, or you like to sit closer than 1.5 times the diagonal measurement, you may well not be able to see a difference in 720p vs. 1080p... hell, ABC, FOX, and ESPN all broadcast in 720p because while you may not be able to tell 720 from 1080 on the progressive side until you get close or you go really big, you can definitely tell the difference from progressive to interlaced. The market does much to convince people that 1080 is better than 720... but the little secret they don't tell you is that 1080 is better as long as its 1080P, and as I said earlier, you may not even be able to tell the difference depending on the picture/room size of your particular application.
Plasmas look really sharp, but they too are pricey, and while they are more reliable than they used to be, I can't help but feel that they loose pixels to burnout.
Best bang for buck up to about 50-60 inch would be a straight up 60hz LCD. Save the money you would spend on getting 120hz, and get a Blu-ray player (or a PS3 - which does Blu as well I might add)
If you are remotely interested, here is the link to my
Home Theater set-up over on
Blu-ray.com.