You are in a bad spot price wise. At $500, you can buy a nicer, bigger one, but at $400 you can still get a nice TV. I went for the Panasonic because I liked it better than the other $300-$400 TVs. There are some nice Toshiba and Samsung TVs in that range.
Another thing--make sure the TV has enough of the right kind of hookups for you. All I needed was 1 composite and 1 HDMI plus one for Cable TV. If you need more, you may want to look into a switch box or a higher end smaller TV. Some have 2 or 3 composite/component and 2 or 3 HDMI. Some have 1 of each, some have HDMI and NO composite or component.
Most games (in this generation) are 720p. It really depends on if you are looking forward to the next generation of consoles now, or in several years. Personally, I am not going to be moving into the PS4 until closer to the end of the generation. I still play a lot of Wii and PS2.
Another thing, it is said that the human eye can't tell the difference between 720p and 1080p at a normal sitting distance on screens smaller than 42". It really depends on how close you sit, and the size of your screen. I am personally about 10 feet or so from the TV. (I know people will disagree with me on that point.)
Really, you are going to be in shock at how good your games look when you first turn on a new game on a new HDTV.
In some stores (My local Best Buy) hook the TVs up using a coaxial cable, and it looks like crap, I found that Sears was fairly consistent in having their stuff hooked up correctly.
Here's another link that may help you some, it discusses resolution a little bit.
http://www.ehow.com/how_4705379_choose-tv-p-vs-p.html
There are thousands of articles online about TVs, but to be honest, we also bought a new 46" HDTV last week, and I told my wife to go pick which one she liked the best. We ended up with a Samsung LED, that was $600. It's really what you like the best and what is the size you need and want in your room. I personally have a room that is big enough that I can sit 10-15 feet away from the TV and play, not everyone has that option. Take your time, look around at your local stores and pick a good one. Most screens will last over 50,000 hours which is quite a few years. LED are very energy efficient.
Trust me though, ANYTHING will look better than your SDTV for modern games. If you got any questions, I'll try to help you as much as I can. Send me a PM, I'll get to it faster.