I've got a HD ready TV and a HD DVD player. DVD's look awesome. It helps to have a decent stereo to complete the experience.
I went for this TV:
32in LCD as it came recommended on the AV forum website and it was cheap. I don't have a massive lounge room so the 32 suits my needs. It only has one DVI (HD) input so if you wanted more than one HD source (DVD and sky for example) you'd need a a HD switch of some description.
I recommend you get on the AV forums and get some advice on there.
I don't have sky HD but I can see on the channel listings that there are more and more HD channels but I don't know what they're like - I haven't gone that way yet.
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