OH MY GOD YES - HUGE HUGE DIFFERENCE!!! If you want the full experience make sure you invest on a 1080p Full HD Blu-Ray Player and a 1080p TV set (especially if you are going bigger than 37")
If you have the money look for an LCD set with 120Hz and some sort of Motion Interpolation - will give a pretty crazy movie watching experience. If you REALLY have money go for an LED tv set!
I got a Blu Ray Player and just got a new LG LCD, now I'm in the market for a good surround sound system!