Andy and rewerb are right. I have the 37PX80 and sit about 8 feet away and at this distance enjoy a fantastic pic for the money (585 quid with 5 year guarantee). I watch mostly sport and Bluray from my PS3 and suffer watching Virgin SD pics (not that bad really)
If you are really concerned about spending all your cash then I'd move up to the Sony 40w4000. You can get them under 900 pounds (Digital Direct) and the Full HD pic is excellent.
As for size, well ,I will be buying a 46 inch for this lounge (moving the 37'' into the other lounge) so feel a 40' should be no prob for you. I'm not in a hurry though as the Panny is that good.
Good luck in your search.