i personally use a 40" 1920x1080p tv from 3-4 feet away and its fine.
this is how i use my 40" 1080p tv
whenever you increase the physical size of a screenwhile keeping the same resolution the picture is not going to be as sharp when viewed at the exact same distance. there is nothing you can do about this fact except to sit further back.
here are some examples expressing this.
for reference here is a quote from our monitor guide stickied in perepherals:
a 1920x1080 resolution (which also equals the number of pixels) has 2202 pixels in a diagonal line from bottom left to top right. since monitors are also measured in a diagonal line from bottom left to top right we can take this number and divide it by the physical size of the monitor to give us our pixels per inch rating. in general the average unaided human eye does not benefit from greater than 300 ppi.
common monitor sizes at 1080P
1920x1080 @ 20" = 110 ppi
1920x1080 @ 22" = 100 ppi
1920x1080 @ 24" = 92 ppi
1920x1080 @ 26" = 85 ppi
common television sizes at 1080p
1920x1080 @ 40" = 55 ppi
1920x1080 @ 42" = 52 ppi
1920x1080 @ 46" = 47 ppi
1920x1080 @ 50" = 44 ppi
1920x1080 @ 60" = 37 ppi
for reference here are some other product ppi numbers
1136x640 @ 4" = 326 ppi, iphone 5 retina display
10000x10000 @ 20" = 707 ppi, prototype lcd display advertised in cpu mag
2560x1600 @ 30" = 100 ppi, dell 30" ultrasharp monitor
1920x1080 @ 5" = 440 ppi, typical 5" 1080p android phone
1280x720 @ 4" = 367 ppi, typical 4" 720p android phone
640x480 @ 32" = 25 ppi, typical 32" 480i crt tube television
what hz rating is the monitor? since you specified pc mode this points to a 100/120hz monitor since pc mode is typically 50/60hz. by game performance are you saying that the picture itself looks terrible or are you having trouble with the panel lagging behind?
another factor which can affect image quality but has nothing to do with pixelation due to the size of the monitor are settings like sharpen, blur, zoom and contrast on your television set.
in windows the standard mouse icon always has a shadow under it. perhaps you never noticed before on a smaller screen.
to me it sounds like you are being picky. sit further back from the screen and you should be fine. i would say another 6" to 12" further.
while 2560x1600 monitors are great they also require much more computer power to game with. if you sit at the recommended distance from the screen depending on its size you wont be able to tell the difference anyways.