It depends on the player and on the DVD quality. With my 40" S81 and Pio696, with a viewing distance of approximately 3m, I can only notice pixellation and jaggies with not so good DVD transfers and if using component connection. With upscaling, no complaints so far. With a 32", assuming the same viewing distance and with upscaling DVD, it should look better.
Pixellation was also one of my major issues against LCD's when I was planning to buy a flat panel HDTV. That's why I opted to go for a plasma first because the PQ is smoother and more natural. But when I was forced to shift to LCD and got the S81, it is better than I expected for an LCD.
The PX5M would be a better choice. With a little haggling you may be able to close the price gap within your acceptable level.