LCD Projector. The image is around 8 feet or 9 feet across, running at 1024x768 (the projector's native resolution) with 8X anti-aliasing to smooth out the jaggies. If you attended the convention last year, then you saw more-or-less how I typically fly, though at home the image is a little bigger, a little higher up, and a little farther away.
When combined with the TrackIR for views and a surround-sound headphone set, the immersion factor is very high. Your eyes get to focus farther out and the image sort of gets to wash all around you.
Needless to say you sort of need to rearrange your computer room, and I built an open cockpit to make things easier, but the result is incredibly comfortable and easy to look at for hours on end.
Lamp life is between 2000 and 3000 hours, and I only play 15 hours a week or so. My last projector failed after 10 years of use and the lamp still had 25% of its life left. The only real problem is that native resolution is pretty low on projectors, so you need AA to smooth things out, but a modern PC can generate hundreds of frames per second in AH at 1024.
I wouldn't fly any other way.
-Llama