big screen tv. i have 2. one in the living room, one in the basement. and in the basemwent, its HUUUUUGE. and on the other side of the basement, we have a pinball machine and old SNES games behing the white curtain, and i think we have some more N64 games behind there.
We've had a projector for the last 4 years - wouldn't change it. The screen is the size of the wall (15 foot) and freaks out the neighbours when they walk past (tee hee). Got it for £5 from a dump. Who would want a 60" flat screen when you can have your own HD cinema? And beloved has done the surround sound thingy too.
Crap advice about needing a darkened room - you don't. Ours works fine even in daylight - but for really good hd you DO need the curtains drawn and funnily enough, you can still do that even when that evil ol' sun is shining!!
I'd go with the television, the projector ends up being more expensive in the long run, those bulbs run up to $400... Ouch. Not to mention the quality of a projector isn't 100% unless you've got pitch black surroundings.