Personally, having gone through this issue at the end of 2008, I found that LCD was better.
I took advantage of John Lewis having a large array of different manufacturers to view and opted for a 40" Sony Bravia with Motionflow - and having added the Blu-ray player I can honestly say my eyes have been stunned at just how good the picture is. The 40W5500 series is well worth the £650 it was selling for at Xmas, and as I get older I'm certainly glad of the size increase from my olde 25" CRT!!
Don't get me wrong: Plasma is OK, and will go to larger sizes that LCD but is VERY heavy in comparison - you'd certainly need to hang it on a solid wall.