I can recommend the Optoma HD65, it's a 720 DLP projector, Dixons are knocking them out for about £420 with a discount code.
If you are going for DLP best go for a demo just in case you are prone to rainbows.
Picture quality is brilliant, Sky HD and Bluray look excellent, it also has plenty of user controls to get the best out of it. Ordinary TV looks very good too as does DVD. The PJ is very bright and even works well with just the curtains closed during the daytime, but it's only in a darkened room when it comes to life. Colours are very natural and the images just jump out at you from the screen.
You can use the PJ in various ways, desktop, ceiling front/rear projection.
Lamp life is about 3000hrs and cheap to replace, £95.
Screen choice is also important, I use a 1.1 gain screen from Beamax. Positioning is critical as well as there's no lens shift, so working all the distances out can be a headache, there is a distance calculator available from projector point that really helps.
It's a fantastic PJ for very little money.
There is a thread over at AV Forums dedicated to this PJ, it has loads of user comments and plenty of screenshots that will give you an idea on what this PJ can do.
http://www.avforums.com/forums/showthread.php?t=747144