LCD TVs are recommended for gamers because they don't suffer from burn-in, come in many different screen sizes, and becoming increasingly affordable. It’s important to a pick a model with a PC (VGA) input and at least 3 HDMI inputs to connect an Xbox 360, PS3, and other HD gear. Many newer HDTVs also have a "Game Mode" that can reduce lag, a major concern for serious gamers. Lag is mainly seen with older game consoles that cannot output in your HDTV's native resolution, which forces the television to scale and process the image. If you're using an Xbox 360, PS3, or HTPC for gaming, you probably won't notice any issues with lag because you can set the system output to match your HDTV's native resolution (720p, 1080i, 1080p). For more information on the topic and ways to measure the input lag of your HDTV, check out this AVS Forum thread [1] on this HDTV Lag Guide [2].
The Sharp LC-42D65U is an excellent match for a PS3 or Xbox 360 with native support for 1080p. It's also packed with 5 HDMI inputs and a PC (VGA) input for connecting multiple gaming consoles, a HTPC, cable/satellite box, and other HD gear. The Sharp 65U series is one of the best LCD TVs in terms of input lag, but for best results, configure your PS3 or Xbox 360 to output in 1080p. If you're using an console that can't output in 1080p, this HDTV's "Game Mode" actually does a pretty good job reducing input lag. Picture quality is not quite up to par with the best Samsung or Sony LCD TVs, but for gamers, that's less of a concern.
The Samsung LN52A650 has 1080p resolution to take full advantage of the Sony PS3’s and Xbox 360's 1080p output, plenty of HDMI inputs for connecting all your gear, and a VGA input for PC gaming. The set’s overall image quality is excellent with deep black levels and accurate colors. Also available in smaller sizes if 52” is too large for your living room. Note that to minimize input lag, you should set your Xbox 360 or PS3 to output in 1080p, this set's native resolution. There are two other recommendations for reducing input lag: use the VGA input or use the HDMI 2 input and rename it to "PC".
This 37" Panasonic is an excellent choice for gaming in a small living room or bedroom. It has 1080p native resolution, 3 HDMI inputs, a VGA input, and very low input lag. Picture quality is very good, especially for an LCD TV under 40".
Sony's XBR series LCD TVs are best known for their excellent picture quality, and the KDL32XBR6 does not disappoint. However, it also performs well for gaming with 1080p native resolution and fairly low input lag. It's packed with 4 HDMI inputs and a PC input.
The 32" version of our #2 pick is a very popular HDTV among gamers because of its excellent image quality, sleek styling, and solid input connectivity with 4 HDMI ports and a PC port. Just like the Samsung LN52A650, this HDTV supports 1080p native resolution to take full advantage of the Xbox 360 and PS3 output. Input lag isn't bad with the HDMI2/PC trick or when using the VGA input.
Links:
[1] http://www.avsforum.com/avs-vb/showthread.php?t=558125
[2] http://hdtvlag.googlepages.com/home