Been told that the naked eye can't tell the difference between 1080 and 720.

Well, it can -- up to a certain distance, but you likely will be well beyond that distance with either of these TVs. The usual guidelines suggest you sit at a distance of about three times the height of the screen. For these TVs that's about 80 or 90 inches (6-1/2 to 7-1/2 feet). If you prefer to (or have to) sit farther away than that, then go for the bigger set because you won't likely see the extra detail of 1080 anyway.

bstnjohn,

There are twice as many pixels in a 1080p set vs a 720p set (2M to 1M). Generally, the more pixels, the better the details in dark passages, greather details and smoother video. Also, if you plan to go with one of the high def DVD formats (Blu Ray or HD-DVD), these are natively at 1080p. The player would need to downconvert to play on the 720p machine. I have 55" 1080p Sony. I definitely prefer 1080 vs 720. I sit about 9 feet away.