Nearly all flat screen televisions sold in the last two years accept digital input, which is a good thing. However, there are two different digital standards to be aware of. HD-Ready gives 1366 x 768 resolution (which is 1366 columns by 768 rows) in a 10:6 aspect ratio closer to a movie theater. 1080p and 1080i use higher resolution, with 1920 columns by 1080 rows. The 'p' and 'i' means progressive and interlaced scanning, respectively, with the latter being the best possible resolution. A TV with either of these resolutions should be digital ready, but double check and read the small print; you may need to buy a digital TV tuner to plug into the back of your new flat panel TV if it's not.
The reason why this matters now is three fold. First, HD-Ready TVs can be had for discount prices, often under a thousand dollars, fully digital ready. This is because it's a stop gap to the higher resolution of 1080. Second, unless you have satellite TV, for the next two or three years, most (if not all) of the digital content you'll be watching is formatted for the lower resolution anyway. Third, while the mandatory rollout for all digital broadcasting has been set for 2008, there has been no standard defined for what resolution those broadcasts will be in. It may make sense to buy an HD-Ready TV and wait on the more expensive model. Unless the price is really good, make sure that your TV is digital ready. (An exception on the "hold off on 1080" mantra is HD-DVD and Blu-Ray DVD formats, both of which can use the full resolution. If you watch a lot of DVDs and are planning on upgrading to one of the high definition formats, it's worth it to get the better picture now. On the other hand, by the time enough material comes out on either of those formats, and they come out with DVD players that can handle both of them, the 1080is might be as cheap as the HD-Ready TVs are now.)
When buying your flat screen TV, it seriously pays to comparison shop. The market is transitioning; what used to be a high margin luxury item is, due to increasing LCD fabrication capability, becoming a commodity electronics purchase, and many manufacturers are in a price war, trying to make up for thinner profit margins on volume. As a result, if you scout around, you can usually find a model that's being phased out and liquidated cheap to clear floor space, particularly online.