I had a Sony Wega 32" CRT which I used with the 360 for around 3 months. Some games looked good, whereas I had real problems with others. I sit quite far back from the TV and had to shelve great games such as GRAW as I just couldn't see what was happening on-screen
I ordered the Sony 40" W2000 HDTV last week and it arrived yesterday. It's just awesome the difference it makes, the colours are so much better, everything is so sharp and crisp, it's like I'm playing on another machine. Like I said, some games (such as Fight Night 3 and Table Tennis) looked great in SDTV anyway and the addition of HDTV has just sharpened them up a bit. Others though, like Fifa 07 and GRAW, have found a new lease of life on my HDTV. They just look completely different - so sharp and crisp, with details I'd not even seen before.
So in short, the 360 on an SDTV really depends on what games you enjoy. It's certainly very playable and you can enjoy most games, but if you plan to upgrade to HDTV anyway, expect the 360 to accelerate the process