For viewing distance of 5ft, 32" with 1366x768 should be fine. I just got new TV (Sony Bravia KDL-32CX520) last week, so I went to the shop to stare long and hard for many TV. I can't see the pixels on 1366x768 5 ft away.
LED is just for backlight, it will save you some electricity, it turns to max brightness instantly (some LCD screen with fluro tube backlight taks some time to warm up to max brightness and unfortunately, I have two of them
), also LED they are brighter (IMO).