Emmamed:
with that sort of budget you will get a nice 42". i would say plasma, as with lcd, you cant view the screen if you at a funny angle.
You can actually - it just depends on the tv. Some have a narrower viewing angles than others
LCD or Plasma - horses for courses. Plasma have better "blacks" and are better with motion but they are heavy, power hungry, chuck out a lot of heat and reflect easily. LCD the motion can be blurred with the cheaper ones and the blacks are poor.
Basically go to a shop look at both and get which one you prefer.....
Also - now you are getting a flat panel you might want to think about mounting it on a wall, so bear that in mind when looking at them. You will want one that is the "right" size and look for where you are going to mount it.