If your SDTV can accept rgb scart I'd highly recommend getting an rgb cable, will make the image much sharper and improve the colour of games.

When I first bought my PS3 I only had an SDTV and the text for GTA4 was virtually unreadable, so it sat on the shelf for a month until I got an rgb cable, it made a massive difference, text was clearer and the game looked sharper.

If you do decide to get one, must warn you if you plan to use your PS3 to watch dvd/bluray because of the protection (I think its macrovision not 100% sure) films will be displayed in green.

To many people SDTV and HDTV can't be told apart, but you definitely don't need one to enjoy the amazing graphics this gen, although you might prefer it more. Next gen however, you will probably need one.

Text can be an issue sometimes, but through interpretation I found that for the most part I can deal with it.

I used to have my PS3 hooked up to my HDTV on 1080p HDMI. But eventually it got very akward because people would always roll their eyes at me playing in the living room, and people wanted to use the TV for other things(I have a PC hooked up to it as well). So I moved it to the bedroom to use on a SDTV and it looks fine. Not as good but still pretty good.

Later I hooked up the Wii to the HDTV(which everybody uses), and I also think it looks fine. So it's basically SD across the board for me, and I'm happy with it. I get to save money too.

Honestly, I don't think HD is all people say it is. It's completely overrated.

I played my 360 on a 11" SDTV and it looked horrible.
Then on a 18" PC monitor in full HD and it looked so much better.

Then when I got my PS3 I hooked it up on my mom's 50" SDTV because that PC monitor I mentioned before didn't support HDCP and it looked average (guess the screen was too big this time)
Now with my 24" PC monitor it looks fantastic.

So the picture of your TV should at least be better than in the SDTVs I used before.

But HD is definitely worth the jump.

This was my only problem with my 32 tv, when playing MGS4 I could barely read any of the text, such as my stealth %.  Aside from that the game looked great.  When I finally got my 40 inch Samsung, my jaw didn't drop but I was very happy to be able to read again.

LOL. Tell that to my 42" 200Hz LCD screen and all the people who have they're jaws on the floor. It's only overrated if you can't afford it and are too stuborn to admit it's awesomeness.

BTW, SDTV is definitely good enough for PS360 gaming, but saying HD is overrated means you haven't spent serious time on a *quality* HD panel.