I was amazed at the difference this made. I didn't use flat black but a color called Magma. It's nearly black and is about the same shade as lava. The paint store at the time didn't have any black and this was as close as they were able to come.
I have thought about painting the rest of the room a darker color but not black for the same reason as Zybar, I don't want the room to feel too small. The wall to the right of my screen is covered in dark acoustic foam for about 4 feet, so there is no reflection from the wall and the other side of the screen is open to another room, so stray light is minimal.
As Horsehead mentioned, it really reduces the desire to upgrade projectors.