Room: 16 x 18.5 how big of tv?

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Go as big as you can afford to.
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You really need to tell how far you are going to sit from TV rather than how big your room is, I can say I am in a 14x24 with speakers out almost 4ft from wall so I have 20ft left over, I sit 11 feet away and I run a 90 in screen with a Projector. If you have no issues with light control I suggest you look there, my 720P HD Panasonic unit and budget screen was only $800 and thats cheaper than most budget units of 42 and certainly above.
If you google HD screen size and seating distance it will give you an idea of ideal size to look for, with HD units and signals you go as big as you can within reason, not like the old days where you had to sit so far back for proper picture to avoid seeing pixels.

They had an Aquos rep on Fox and Friends this morning and I believe he said the tv height should be no less than 3x the viewing distance. But then, he sells tv's.

Get a 50". Almost no one ever says they bought one that was too big but a lot of people regret not buying a bigger one. I got a 50" 720 Panasonic for the living room and my wife picked out a 42" 1080 Panasonic for the bedroom. The 50 was $1200 and the 42 $900 at costco, which I recommend. Unless you watch mostly Blue Ray I don't think you will see a difference between 720 and 1080.