I guess it depends on what you like looking at and what you already are working with, how much you want to spend vs how long you want it to last, and all that. How much of a "video-phile" are you? I've no experience with anything upconverting but I watch a lot of DVD, and here is what I have observed:
My mom scooped up one of the last 1080p HDTV crt flatscreens for 500 bucks at Frye's late last year or early this (34" ws sony); the thing weighs like 300 lbs, but since placement of the set was in a corner of the room and unaffected by physical depth, she now delights in watching "Smallville" in HD proper and makes the most of her subscription to Netflix. She and I were both halted in our browse through the store by the picture on that set despite the fact that it was quite literally on the floor - and my mother hasn't been known to be much caring as far as quality AV goes, so for her to notice something like that means that there was truly something to be noticed. Watching anything that isn't at least dvd quality on that set is painful so HD broadcast is now a necessity, but I don't think I've noticed that dvd quality source material is noticibly more "Wow!" on her set versus my own 480 capable 36" crt flatscreen sony wega, whose picture quality was pretty unchallenged in its class. Both of us considered the CRT to have a better picture than the LCD's and didn't consider the plasma equivalents for reasons of power consumption at the time.
Me, personally, after having seen the Samsung line of "wafer-thin" led backlit sets (with the 240whatsamagigaherz technology) next to everything else out there right now, I've fallen in love and I'm waiting till I can afford one of these at 36-42" to buy a new set; even though that will be a couple years at the current price range, I think the picture quality on those is worth the wait. Till then I'm happy with with beautiful picture that my non-HD Sony wega still gives me on DVD quality stuff.
Other thoughts: The only way to be certain is to comparson shop - take a look at your budget at see what it would get you now and whether its worth it. Keep in mind that shopping can also include second hand stores and ebay and craigslist or online ads if you don't mind a deep-dish crt HDTV as many are ditching these for the slim-line varieties for the price of "come pick it up".