Resolution determines the number of pixels on your screen. Bigger size with same resolution = bigger pixels. Yes, it will be detrimental unless you increase the distance between you and the bigger display, relatively to the 32''.
You might not notice the difference if you're already using the 32'' from a large distance (I'd guess around 3 feet / 1 meter). That is quite a distance even for a 32'' display, but 42'' is just massive.
you have a picture on an 8.5 x 11 piece of paper. put this into the copier and magnify it 1.5-2x and you notice the sharpness degrades. what you gain in size you lose out on in sharpness, unless of course you stand further back.
i use a 40" sony bravia 1080p television from a distance of 3.5-4ft away and it works fine. you may need to enlarge your windows font to the next level (5-10%) but other then that i notice no major issues.
yes, a small monitor at the same resolution looks sharper. however, if you have normal eyesight and not some extraordinary eagle vision the sharpness might be lost to you. 32" is a good halfway point between the two (size and sharpness). what you gain with a larger monitor is size. games and movies are much more immersive on a large screen but text editing and other functions are not as ideal as a smaller screen but not terrible in the least.
make absolutely sure you buy a 60hz television or one which has a WORKING 60hz/game mode or you can have visual lag between mouse input and on screen response due to the processing of 120/240hz tvs. they take a 60hz signal and fake in the rest of the frames.
in general i say go for it. you might want to go to a tv store to see the products firsthand though to get an idea of what 3.5-4ft away might look like.