The quality from a TV may be acceptable, but let me put it this way.
I have a 19" monitor, widescreen, with a 1440x900 resolution.
That 32" TV has a resolution of 1336x768, which is lower.
So, even if it was the same size, the image would be bigger, but as the screen is much larger the image will be quite blocky.
Personally I can't stand using a TV screen as a monitor, but some people say it's fine.
As killerb says, you could spend a lot more on a 1080 spec HDTV, with a better resolution, but they tend to be expensive.
Not sure about your surround sound question, there may be some way of doing it but I really don't know.
If you're running XP 2GB will probably hold you, but with Vista you should consider more. Memory isn't expensive right now.