Buying an HDTV to replace older TV?

Okay so I am ready for the big update I am going to replace a perfectly good 27" Hitachi television with an 37" LG Scarlet with 1080P and 120Mhz refresh rate. Everywhere I read they suggest that I should be replacing it with a much larger screen at least a 40". Well I do have some problems with space I am restricted to 39.6" space width. The LG seems to fit perfectly but what about viewing. If everywhere tells me I should not be further than 8 feet from the set. Seems like it should not matter if I am using a 27" non HDTV. Still wondering if the 37" LG will be big enough?