For most people to appreciate the difference between 720P and 1080P you need at least 46 inch TV.
I play games on HDTV @ 1080P. I have 3 setups 70inch, 65 inch, and 50inch. I have 42 Inch HDTV 720P and 1080P is atmost the same. But again it can be subjective from person to person.
All my games are set to 1080P resolution.
With that i don't use the 42 inch for gaming. Its the TV in my exercise room