Projector or Flat screen TV?

I heard about new Epson projectors going for about $3000. I know LCDs are like around $2,000, and if I were to get a 1080p screen, which one should I go for? I don't think I have enough space for a projection on a screen, the size wouldn't be like most people have it on entire walls. LCD on the other hand would still be good. So is a projector(Epson 1080p)at around 50-70'', or possibly even 100, better than a 42'' LCD(best quality)? Does the projector have to be at full screen to be at best quality? How exactly do projectors work?