Tony, my living room 47" inch Vizio has two Game settings. A game mode and a game picture setting. My 32" inch Vizio for the BR only has a game picture setting that I have found. I'd suggest setting everything you can to game mode just to try it. Playing on different size screens just takes a bit of time to get used to.
Hey, my dad bought a new 3d 120hz Tv a while back and I remember trying to run games on it and the lag from the console to the Tv was unplayable. Its to do with alot of post processing to give that smoother image, at least on my dads tv. There should be several settings for your TV, although even on the gaming mode I couldnt run 3d and there was still lag, but I found that there was a PC mode which made it run at the standard 60hz (fps) and suddenly the response time was instant again. Hope you get it sorted out.
This is input lag, or more accurately display lag, and it can be a real problem. Check to see if your TV has a game mode setting. This stops the TV's post-processing effects and reduces input lag. If you don't have a game mode, experiment with the other modes.
Unfortunately, some TVs exhibit high input lag no matter what, and it can make fast-paced shooters unplayable. Also, many manufacturers do not reveal their input lag times, and the trend has been to increase the amount of image processing in new TVs adding to input lag. You should research this before purchasing a new TV.
Pixel response time is another issue, but it usually isn't noticeable.
Good luck, OP.