Answering the question you want a HD-DVD player. Your television cannot even display 1080p. So there goes the first reason for buying a Bluray player. The second reason is the studios which movies do you want to watch. However that might not be a concern for much longer granted the more affordable price of a HD-DVD player compared to a Bluray players.
You will get the same visual quality regardless of which player you purchase. The only difference is the price. Both are backwards compatible with DVDs. HD-DVD requires backwards compatibility with CDs as well. Most Bluray manufacturers are backwards compatible with CDs, but its not required.
Given that you have purchased a 20" television I will make the assumption that your not going to spend over four hundred dollars on a player. Were that the case you would have purchased a much larger screen in the first place.
I would also not get caught up on the signals. Displaying in 720p is amusing for some time, but eventually you will discover the experience from having a full screen is preferable. Further more you always have the 720p option if you just have to see that picture in perfect clarity.
Go with the HD-DVD. You cannot even use 1080p anyway, and you will save yourself around two hundred and fifty dollars.
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