I just bit the dust and bought a Panasonic 42" 720P plasma. I wanted to go with a Panny 3D set, but on disability pay I just couldn't swing it. I ended up getting the TV and a BD-65 Blu Ray at Costco for under $600. I am totally blown away by the PQ on this set. I thought long and hard about choosing between 1080P and 720P, but after considering the TV size, my viewing distance, room and my eyes, I chose the 720P at less than 1/2 the cost of the set I wanted.
I cannot believe SD PQ on this set. I have numerous recordings from (GASP!) analog cable on my old Panny DVR and the PQ is beyond amazing. I also stream a lot of movies from Netflix and even with my limited bandwidth of 2.6 MB, I have great PQ. The short story is: I am sold on Plasma. The blacks are incredible and it uses very little energy (under 200W). I am totally blown away by the Blu Ray movies and how well it upconverts a regular DVD. Right now my only viewing choice is Netflix or Redbox and I am very happy. If I can convince my apt unit to upgrade our antenna for OTA, I'll be very content.
I think with 3D, Plasma is here to stay, especially with the black levels and price so far below comparable LCD's. I know they are catching up, but I think it will be awhile before they can catch up.