My parents sit about 3m from a 32" Full HD TV, and the difference from SD is easily visible. Upstairs they sit (or rather lie in bed) about 2.5m from a 24" Full HD TV, and the difference from SD is still visible though I'll admit it's no longer "easily" at this distance from a TV that size.
Even upscaled SD can look better on HD channels due to the low bit rates used by some SD channels. BBC1 and BBC2 are OK in SD, but ITV1 is often appalling. I remember watching a Ray Mears programme where they kept showing his camp fire at night and during the day some babbling water in a stream with the sun glinting off it. Both of these shots looked absolutely terrible as they were a mass of square blocks. A couple of years later this programme was repeated and by then Freeview HD was broadcasting, and the uspcaled SD version on ITV1 HD looked so much better.