Digital picture frames are getting cheaper and larger but they still have a way to go in terms of display quality, resolution, size and convenience before I'm going to invest.
Meanwhile, I do have a decent 17" LCD attached to the wall in the kitchen connected to a PC in the closet. Aside: The massive convenience of a built-in PC in the kitchen was not wholly obvious to me before I installed it but it has since become the most used console in the house.
Rather than a screensaver, I use John's Background Switcher which is a tool that among other things can be set up to poll Flickr for a set of photos and create various desktop backgrounds from randomly selected ones. Full screen, montages and photo mosaics are simple configuration options apart.
The last trick is a scheduled task that performs the 'Toggle Desktop' to minimize all windows after a period of inactivity.
copy ShowDesktop.scf %systemroot%
schtasks /create /sc onidle /i 15 /tn "Show Desktop" /tr "C:\Windows\System32\cmd.exe /c %systemroot%\ShowDesktop.scf"