i can tell you what ive learn from jumping to SDTV to HD just last year

for gaming SDTV or plasma are the best b/c they have no motion blur

LED is just the lighting method its still a LCD, most use edge lit leds, the problem with it is that you can get clouding in dark screens because of the inconstant technology, full array led is the best and also have the deepest blacks comparable to plasmas now, but cost alot and many arent using em still. i wouldnt hesitate to get the old lcd that dont use led b/c there price is cheaper and they dont have as much clouding as edge lit led

while switching to SDTV to LCD (i wanted a under 40 theres no plasma that size) the biggest issue i had b/c i game on it aswell is the motion blur its very noticeable compared to a SDTV a 120 and up hrz does kinda fix this but gives you a unnatural soap opera effect and with my experience with it, it also messes up the games cursors which can be seen here it can also give noticeable controller input lag b/c it uses more processing power

http://www.youtube.com/watch?v=iF9iRfwEWlc

if your on a low budget i wouldnt worry bout the 120hz, my tv has it and i never used it even on movies i would more worry bout response time, if you dont want a plasma i would highly recommend a LCD that uses a ips panel my LCD does have one and besides a SDTV and plasma its the next best thing to combat motion blur while gaming. tvs that use it are LG and most Panasonics, you can tell if a LCD uses a ips panel by running your finger over the screen it should not leave a trail like tn panels do

After reading BHR's response, I need to clarify my response.

You only get better blacks and overall color with LED (like Plasma) when you get the 'backlit' LED, i.e. not the really thin models.

If you go with a really thin model, then there is no performance difference as compared to regular LCD TVs just like BHR says.

Another thing to look for is 10 bit color panel instead of 8. All sources are 8 bit, but the tv applies brightness, contrast and color corrections. You get better color results if all that is handled in 10 bit instead of 8.

My plasma tv (Panasonic) is 8 bit and has quite a lot of color banding issues at night time with brightness and contrast set to low.
My lcd tv (Sharp Aquos) 10 bit panel has better blacks then my plasma, the dynamic backlight works very well. (pretty expensive tv though, but was well worth it)

For LCD response time is important, 4ms response time won't show any blur or ghosting.
4ms 60hz looks better then 8ms 120hz. Although the difference is small, 8ms 60hz still looks good.