What's the resolution of your .avi? I'm guessing it's less than DVD, and probably less than 480i/p. I have an

tv with a 50" Panasonic 1080 and, though watchable, movies at that quality level (basically SD or less) do look fuzzy. For instance, some of the lower quality "digital copies" and older, lower res. iTunes movies - both really meant for portable device viewing.
DVD's are far from dead. Streaming or downloaded movies at 480 usually have more compression artifacts than a DVD. Most still don't equal DVD, though I recently got a couple of Digital Copies which were 480 or better ("UP" and "Star Trek, 2009") and they look OK on my setup. I would say those still don't surpass a good up-scaled DVD.
If you're getting a 52" 1080 tv, you are
going to start collecting hi-def video. Even 720p blows the Digital Copy, and especially your .avi videos, out of the water. You'll get spoiled real quick watching any hi-def source, especially 1080. Sources from cable, sat, or DTV usually look very good, with most Blu-rays on the top of the heap.
That said, I do have quite a collection of 480p video on my

tv - a bunch of DVD's and several TV series (like the entire Outer Limits collection). They all look very good, for 480, on the 50". I would be willing to bet they are encoded at higher bit rates and quality (using H.264) than most .avi vids I've run across, so take that into consideration when comparing my results with what you might get using your .avi sources.
Hope this info helps.
Enjoy the big tv, btw.
