Glenn Reynolds has a discussion of projectors as an alternative to flat screen TVs. I have been a projector owner through 10 years and 3 generations and am a big fan of them in certain applications.
I have an Epson 8500UB, which is close to the top of their line and can be bought under $2000 (which is amazing - the projector price drop in the last 10 years has been stunning). It is a 1080p projector with great blacks and color. I have it ceiling mounted with a 110-inch diagonal 16x9 Stewart screen. I have one of the silver fabrics (I think the Firehawk) that enhances black levels over the white fabrics (there is a reason movies used to be shown on the "silver screen.") The screen is acoustically perforated so the speakers (except for surrounds) are actually behind the screen (as in movie theaters).
In the evening, with the lights down and the projector adjusted correctly, the effects is awesome. Not to be missed. I have had to kick many visitors out of my house. Sports are also amazing, particularly in HDTV.
As Glenn's commenters mention, you have to be careful with light. I picked this Epson both because it is really about the best in its price range, but it also is very bright. Unlike my last generation projector, it can overcome some ambient light. I have to have blinds in my den, but with the blinds down but the room still lighted well I can watch sports on the bright setting quite well with this projector (you really don't want to watch a movie with this bright setting - movies are all about the blacks, and to get those looking great you need darkness).
Anything 60" and below, get an LCD. But if you really want a ridiculously large screen for movies and sports, this is the only way to go and I highly recommend the Epson line -- they have projectors at many price points and they are mostly all very good.