Zar,
I just recently purchased a 37" Viewsonic LCD TV for $1199 (after $300 in rebates). It is a fully integrated HDTV with speakers, SD and HD TV tuners, table stand, etc. It is a great TV at that price. I bought it because I had limited space and the Viewsonics speakers are on the bottom, not the sides, thus saving space.
IMHO, the 37" Viewsonic (or other panel) would be great for movies/DVDs, but not great if you watch much SD TV. SD is very watchable, but looks pretty grainy at your viewing distance. It looks great in my room, but I'm about twice the distance from the TV as what you are proposing.
Enjoy,
TIC