Two things you have to remember about the new breed of flat panels (whether Plasma or LCD):
1. They are designed to play HD. The native resolution will likely be 1920 x 1080 (Full HD), which means when playing PAL sources (like standard def UK TV and DVDs), they have to upscale the resolution from 720 x 576 to fill the screen. As you can see, this is a lot of pixels which need to be made up! As a result, the picture won't look as good. However, play HD on it, and (with the right TV), the picture will look fantastic and much better than your current TV.
2. A 40" TV is much bigger than your current TV. Considering the point above, any flaws in the picture as a result of this upscaling process will be magnified by that much.
So if your primary desire is for watching normal TV and DVDs, then don't expect to be blown away by the picture compared to your existing TV. However, as always, the best bet is to get out there and start having a look to see what you think!