Chuck Cage at Wired has a good article on explaining all the numbers in HDTV.
He says: “A 20/20 human eye can’t recognize details smaller than 1/60 of a degree of arc. Don’t worry, you don’t have to understand that. With a little math, though, we can use this number to find the distance beyond which the eye has trouble distinguishing one pixel from another. It turns out to be 137 percent of the diagonal measurement of any 16:9 widescreen: around 38 inches from a 32-inch TV. So if you’re sitting 5 feet away, you’ll never notice the difference between 720 and 1,080 lines of resolution. But if you trade up to a 60-inch screen, that distance jumps to almost six feet. Better push the couch back,”
I wonder how many people sit 38 inches from their 32 inch TV? I have a 480i TV (read, CRT Sony KV-36FV1) and if I sit 42 inches away while playing Halo 3, I get car sick.