You can't really compare them to monitors. The higher the resolution, the sharper the picture will be when you blow the image up to wall-size. XGA should also work well with HD signals allowing you to get very high res TV output. I have to say that non-HD, standard TV doesn't look that great through a projector. I have Dish Network and it looks a little fuzzy, but still very watchable on the big screen. DVDs are nice, its like being in your own theater with the best seat in the house.
XGA is very good for under $1000. Not long ago all you could get in this price range were SVGA (800x600). I doubt you will find a higher res projector in this price range. There are a couple other XGA projectors in this range, but I liked this one the best. So far this Sharp has worked great for me. No complaints at all.
Check the reviews at projectorcentral.com and the user feedback at newegg.com to find a good one.