OK.....
  Screen and projector. 
 Pro's 
 Huge picture
 Impresses the neighbours
 Great for movies / sport / games 
 Cons
 Needs a darkened room for best results.
 Expensive (to do properly)
 Not suited for general viewing (you'll get fed up of the news being 8ft wide trust me)
 Will need separate video /sound sources / speakers etc to feed the projector and get the sound out. (sky / freeview / cable + Amp + speakers + cabling.....)
 Unless you get a projector with a broad throw, you'll need a big room.
 Screens are fragile!  
 Projector & Screen is fantastic as either a dedicated room solution or a second option with a plasma / LCD for general use, but it's not ideal for your main TV. 
 If you really want to go this route, look for a Panasonic DLP Projector and a fixed screen from Stewart (Personally I'd have a Firehawk) 
 Alternatively, for similar money that you'd pay for a projector alone you could get a 42" HiDef Plasma. 
 Or, for less money, a DLP rear projection TV. These are a lot thinner than they used to be, and give fantastic picture quality. 
 What's rear projection???  
http://hometheater.about.com/cs/tele...arearprotv.htm  If you want a big'ish tele that doesn't break the bank though try here. They've been knocking out some 42" LG's at a reasonable price, and an HD ready 42" tosh for £1500  
http://ws4.richersounds.com/productg...s&pgroup=LCDTV  Pick up a copy of Home Cinema Choice it's a reasonably good source to start off especially for getting guide prices. 
 Rough entry level costs (without considering video sources and the audio side) 
 Projector - £1500
 6ft Fixed Screen - £500
 Or
 42" Hi Def Plasma or LCD - £1500
 Or
 42" Hi Def DLP Rear Projection TV - £1500 
 If you're not fussed about Hi Def then you could get the Plasma / LCD / DLP RP cheaper. 
 [Edited on 1-12-2005 by Mr_S]