I've had a Vizio 42" LCD since summer 2008. So far, so good. If you connect the cable directly to the tv, you get I believe 720 reception on our (Cox) system. If you use the digital cable box (DVR), and connect to the tv with HDMI, you get full 1080 reception. I can see the difference.
Where I don't really see the difference, oddly enough, is with Blu-Ray DVDs. I am not one to throw out something that works, so until a month ago, my HDTV was connected to a conventional DVD player with 1080 upconversion, with an HDMI cable. The DVD player's video signal died a month ago; I gave it to a friend who can use the audio output (still working) for his annual Halloween displays.
To replace it, I bought a Vizio Blu-Ray DVD player with built-in WiFi. The Netflix application streams wirelessly to the DVD player and into the tv, and for this feature alone,, it was worth every penny of its $125 cost. That said, I purchased a few used Blu-Ray disks to experiment with the player. I can't see much improvement over standard DVDs that I used in my old player---but that player did feature 1080 upconversion and was connected by HDMI. So I wonder if perhaps the old player did such a good job of mimicking true 1080 resolution that Blu-Ray on an HDTV doesn't seem that much better?
It's no big deal, I had to replace the broken player, I didn't pay a huge price tag, I got the NetFlix application which I really enjoy, and I would guess that eventually all DVD disks will be sold in Blu-Ray format only, so it's best to be prepared.
Before buying the Blu-Ray, my cable bill was about $85/month, without any pay channels like HBO or Showtime. I did have the "extended" cable service with 100s of channels, none of which I had any time to watch. As soon as I got NetFlix up and running, I downgraded my cable service to the basic 72 (normal definition) channels plus the "basic" 30 HD channels (requires the box) because I can really see the resolution difference between connecting the cable directly to the tv and using the box. Where I live, standard antennae don't work (terrain issues), so either you use cable or satellite dish. This downgrade dropped the bill to $62/month from $85. If I ditch the box entirely, and connect directly to the cable, the cost would drop to $42. My bedroom tv (26" LCD) is connected directly to cable, but at that small screen size, the lower resolution isn't a big issue.
In general, you can see the difference between 720 and 1040 once you get above 40". When I bought my 42" set, I remember seeing a review article on CNET.com in which the author explained that the difference between 1080 and 740 was not a big issue in smaller sets, but becomes noticeable above 40". When I go to Costco, I see moderately priced smaller sets in the 24-32" range that are 740, my guess is they cost less to produce and the resolution gap is not that noticeable at that size.