There is no point in having an LCD projector that produces beautiful images if you don't have a good screen. Using a regular white wall, or worse, a white bed sheet, does not do the image justice. The best surface for an LCD projector, contrary to popular belief, is not white but light grey. This is due to the way that the LCD projector deals with black. The result of DIY screen paint will not be as brilliant as more expensive paints made for that purpose, but it is better than ceiling white on plain drywall.
Painting an LCD Screen
Deal with the surface of your wall first. It should be flat, smooth and free of imperfections. Any bumps, scratches or divots are going to show much more clearly under the harsh light of a projection in a darkroom than they will in normal daylight or with soft interior light. Select an area of wall that allows for the proper throw of the projector and sand it well. If there are a lot of imperfections, or if the wall has a heavy texture due to many layers of paint, doing a skim coat of spackle is a good idea.
There are proprietary paint blends made specifically for screens, but you can produce a DIY version using household latex paints you may have at home or that are easily available at the hardware or paint store. Begin with a prime coat of white if you have used a skim coat or done a lot of sanding, or if the wall colour is not white. Paint the screen a pearl grey with a roller with a low nap. Medium grey is too dark; the right grey is between the middle grey and white. Use white, flat latex paint and mix in a very small amount of black tint, or get the colour custom-mixed. Satin or other finishes with gloss can show the imperfections in the wall more. If you mix it yourself, add minuscule amounts of the black tint at a time, until you get a feel for it. Two coats are minimum for best results. If you can find it, instead of adding a black tint to create the grey, try a silver tint. This will create the grey colour while adding a hint of reflectiveness that is helpful. Finish by painting a border around the screen of plain, flat black, no less than two inches wide, to absorb the bleed of the projection and frame the image cleanly.