Contrast Ratio and brand is, frankly, more important than 120 Hz between-frame blending, or 10bit/color channel color, or ANYTHING. All that stuff, that the various TV companies charge an arm and a leg for, is *worthless*. Human beings have enough trouble telling the diff between 30 Hz and 60 Hz... let alone 60 Hz and 120 Hz, especially if they are merely interpolated frames, and there is a LOT of scientific data demonstrating that most humans can see, at most, 6 bits red, 7 bits green, and 5 bits blue. let alone 8-8-8, or the ridiculous 10-10-10 you pay $100s extra for.
That said... Sony Bravias are the best. There is no question, in my mind. However, the "under $1000" only fits the 32" and 37" Bravia LCDs, I think, as far as 1080p goes.
You can score some good Samsung and good Philips 40"-ish TVs for around $1000 I think. They aren't on par with Sony, but they are pretty good.
To corroborate what other posters have said, unless you're going to use it as a monitor for your computer as well, there's not a reason to get 1080p on a screen smaller than 40", in my opinion. You have to get too close to tell the difference, and 95% of games are 720p anyway. The GPUs on the PS3 and 360 aren't fast enough to do 1080p decently for most game genres -- racing and simplistic arcade/downloadable games are about the only exceptions, due to the way those games are generally rendered.
If I was in your shoes, I'd score the biggest 720p Bravia I could afford (with my $1000) and fit comfortably in my space. Sony really does make the best TVs... no question.
