They sell 1080p projectors that weigh around 10 lb's for about 5-6k right now... projectors have come a long way...http://www.projectorcentral.com/1080p_shootout.htm
1920x1080... thats some nice resolution
But of course, if you only have 500 bucks (pounds...) ... then your kinda limited... I would go with a HD TV because projectors cost a bit more than the TV's, and you need other stuff (Screen, speakers, etc...)
But if you had the money, or there is a real good deal, then I would get the projector. Just because it looks better in a room.