We are lucky to have just moved to a bigger house, but our one TV (kept soley for Netflix for DH and I) was a huge eyesore in our old house.
Not only does it get in the kids' eyelines, but I think they are a huge vacant focal point for adults hanging out in a living space, something I always hated at parties, etc.
Two suggestions to close the gaping eye of a black TV screen staring back at you:
1) what we did at the old house was got one of those cheap Costco folding tables (plastic w/aluminum legs) and put TV UNDER it. Then we covered table with a tablecloth that went to the floor (you could use a pretty sheet, too) Then we put some lightweight pretty books, art, etc. on top. It just looked like a decorative table but after DS went to bed we would roll up the tablecloth side and pin it under the books on top, and lay on the couch and enjoy a movie together. The sight lines can be tricky though
2) we now have a bigger space with room for an entertainment center--I was really adamant that we get a cabinet with doors to close off the screen. So it's really "out of sight, out of mind" You could browse freecycle or craigslist for a cabinet with any type of closing doors, or create a curtain to go across the front of a bookshelf.
3) I never could afford this, but I always thought it would be really cool to have a beautiful piece of artwork covering the TV screen somehow, you know what I mean? I'm no engineer, so I don't know how you could rig that up.
I do think most ppl's TVs have replaced the fireplace as the conversation center/focal piece of their living room design and that bothers me!
For long term, we are looking to kick out the TV and do one big family computer area on a flatscreen--we will only watch movies online (one day we'll get there, not yet) and be able to monitor kids' computer behavior on a centrally located screen. If all you're doing is watching DVDs (not sure if you still watch VHS, but we do occassionally) then you could consider getting rid of it altogether and watching DVDs on your computer or laptop if you can figure out a comfy way to make that work.