Hello mate. Unfortunately, the problem of standard-def content looking less than acceptable on high-def flatscreen tvs is something that you will - to some extent - have to live with unless you stick with a crt tv and miss out on glorious HD pictures. The reason why standard-def content looks poor on flatscreen high-def tvs is mainly because the SD image has to have pixels added artificialy in order for it to fit the higher resolution on a high-def screen, and also just because of the combination of the dismal quality of freeview and the superb detail of high-def tvs. Basically a high-def tv will look great with HD but it will reveal the shortcomings of poor content.
However, newer tvs are getting better at dealing with and getting the most out of standard-def material. The new range of tvs from Panasonic are all excellent at high-def and do a very good of displaying standard-def. Some examples that fit your spec:
Panasonic 42PZ80 full HD plasma
Panasonic 42PZ85 full HD plasma
Panasonic 42PZ800 full HD plasma or, as I strongly recommend seeing as you are looking to 'go down the freesat route' -
the Panasonic 42PZ81 full HD plasma with built in freesat tuner, along with the usual terrestrial digital (freeview) and analogue tuners.
Or if you want a 37" that is full HD (1080p) then you will need to go for an lcd such as
Panasonic 37LZD80 full HD lcd
Panasonic 37LZD85 full HD lcd
Panasonic 37LZD800 full HD lcd
Sony's new W4000 range of lcd tvs are also very good at showing standard-def freevie content as best as is possible considering the limitations of freeview, and is available in a 40", as well as 32" and larger sizes too.
Standard-def material is not all terrible - an upscaling DVD player can give really great results that, while not having the razor sharpness, detail and punch of true high-def, are still impressively clean and detailed, and a pleasure to watch. If you watch DVDs then invest in a decent upscaling DVD player and you can enjoy images that may pass for high-def if shown on a reasonably small-(ish) sized screen up to 42" (at the most) maybe...
Anyway, I hope I have given you some stuff to think about.