If you're looking for a home theater solution, and want to go the projector route, why not consider the Sanyo 1080p PLV-Z700 LCD projector. This full HD (1920 x 1080) resolution projector acts as a great introductory device without having to spend a fortune.
This projector can display 1200 ANSI lumens, which makes it perfect for viewing in a dark room. Another notable feature is the electronic lens cap that automatically places the projector in standby mode when it closes.
The cooling fan is rather large, yet quiet and the unit has a short throw distance. This means that you can project a 100 inch screen from only 10 feet away. That's pretty impressive, if you ask me. The only thing that's not clear about this latest Sanyo projector is the price. But since it's being touted as an entry-level model, it should be pretty reasonable.