Just as when you are building a gaming PC, you want the best TV quality possible to maximize the experience. Though I'm partial to plasmas, I agree that 120Hz isn't the be all end all for LCD displays. More important, for gaming anyway, is response time, contrast ratio, and color accuracy. Nowadays, the best quality in those areas is typically found in the higher end sets which also offer 120/240Hz.
On the plasma front I would like to clarify the distinction between IR (image retention), which is temporary, and burn-in, which is permanent--for the most part. And to get burn-in on most new plasma displays, you'd have to seriously abuse the set, especially within the first few hundred hours of using it. If you research forums like AVS for specific plasma models, you'll find the general consensus is of the two major plasma display manufacturers, Samsung and Panasonic (Pioneer no longer makes them, though you can still find some "in the wild"), Panasonic is the safer bet to ensure no burn-in. You may get some IR, especially at first, but it isn't very visible unless you have the set on in a dark room and the input source is powered off giving you a blank screen. However, the IR will always go away after watching another full-screen image with no static graphics for an hour or so. I've played Madden 09 and Bioshock, to name a couple, for hours on end and have no IR/burn-in to show for it on my 46" Panasonic 800u. YMMV.
Another advantage of plasmas is that you generally get more screen size bang for the buck than with LCDs.