Was that inerent in the flat screen technology, or because of the lack of a larger color pallete available in the driving circuitry? Not that it matters for now, but maybe in a few years things can be better. Worst case, resuming each pixel can respond fast enough, you can PWM it to make it give a wide range of brightnesses.
With MP3 audio and similar psychoacoustic compression formats broadcasters use (I've sometimes heard syndicated radio show "Handel on the law" that sounded horribly wishy-washy because of the low bitrate), and digital TV, the quality is definitely going down. I can see the next Star Trek series (if there IS a next, it looks unlikely): "To boldly bring you artifacts no man has ever seen or heard before!"