I would imagine that you have never seen a really good plasma. Check out the Vidikron, Runco, Fujitsu or Pioneer Elite. HD is going to look pretty good even on a poor plasma, it will look even better on a great plasma. The BIG difference is standard def. It looks lika absolute crap on most HD sets, like you have noticed. SD will lok MUCH better on a great plasma. They have better video processing and scaling and better stretch modes.

That being said, your budget will only allow you a 42" plasma, which may not be big enough. If picture quality is a priority, you may need to save a little more. You will be better off in the long run.

Good Luck!