I would read some reviews on tv's that are in your price range and go for the best 1080p tv you can get. at least then you will know you have the best that you can afford, which is what i did.
I have the Sony 40W2000 which is very highly recommended in most reviews and is a few years old now so can be picked up very cheap brand new. im not sure where you are but this set in the UK can be bought for around £500 these days and its one hell of a good tv...trust me.
Good place to start for reviews: http://reviews.cnet.co.uk/television...02139,1,00.htm
I know this probably isnt what your looking for and i dont know what your price range is but i would also recommend buying a PS3 for watching Blu-Ray and upscaling your old dvd's. it upscales dvd's really well and it does everything you want it to really. with the new slim ps3 just being released the older ps3's are cheaper again and i would think its one of the best Blu-Ray players available for the price.
To answer your question about quality it really does depend on the setup and what film was being displayed and how the store set it all up. some films look amazing and some just look grainy and awfull. alot of new films these days do look impressive on blu-ray but its best to just buy new releases on blu-ray and stick to buying most older films on dvd and just let the player upscale it. ive made the mistake a few times thinking a blu-ray release of a film made in 1980 would look amazing and trust me it just doesnt, the picture does look a bit better but nothing compared to a new film released on blu-ray.
Good place for blu-ray reviews: http://bluray.highdefdigest.com/reviews.html
If they say the picture quality and sound quality is 4-5 stars they are usually spot on. anything less i just buy on dvd.