Certain games have text that is practically illegible without high definition picture. Otherwise, an sdtv works fine. The one upside is you can count on zero input lag no matter what, can be important if you play a lot of twitchy games competitively where split-second timing is critical.
I play on both HDTV and SDTV depending on which one is available when I choose to play. I could take another HDTV out of the closet to replace the SD but I really don't feel like putting that much effort in. Anyway...SD is fine. Some games have illegible text (Dead Rising, ME 2 for example). Other games have some screen issues (MW 2) where you can't necessarily see everything, but its fine otherwise.