Flat screen TVs are so much easier to work with than those old gargantuan box TVs. They're also much better looking, but they don't always fit in so well with the rest of a room.
In my opinion, the biggest problems are when the TV is:
a) the only rectangle shape
b) the only glossy black thing in the room.
If it looks unlike anything else in the room, of course it will stick out like a sore thumb... and trying to hide a TV often just draws more attention to the awkwardness or makes it hard to use.
Here are some great ways to work with a TV, not against it:
The repetition of the glossy black, rectangular shape in other elements of the room makes the TV look like it belongs, even in a traditional room on very white walls or cabinetry.
Using a TV as part of a cohesive gallery wall looks awesome in this room from the latest issue of Lonny. If you look closely, you can see Kate Spade's designer also used this trick in her home:
Here's a less formal version of the gallery wall disguise. The big square void is less harsh with all the other square and rectangle shapes around it.
Another option is to put the TV in a space where we already expect to see a large, dark rectangle. This one was worked into the mantle with a custom cover to make it fit the space. Not sure I'd like watching such a low TV, but it works.
How do you design around your TV?