I'm not sure where the story got started that the only purpose for 120hz was to "fix" a problem that is inherent with LCD technology, but it isn't true.
Since the inception of flat panel displays, a common complaint from customers, especially when watching DVDs, is that the "judder" effect (which has been around since the first film went through the telecine process for display on an NTSC television) is more noticeable. Since the frame rate of film, which is captured at 24fps cannot equally divided into the frame rate of video, which is displayed at 30fps (really, it's 29.97, but that's neither here nor there), a pulldown process needed to be developed to compensate. The result: judder.
In response to this, plasma manufacturers reacted first, by developing panels that can display at either a 60hz or 72hz refresh rate, which can evenly divide both video sources (such as broadcast television) and film sources (such as DVDs and Blu-ray Discs) into even numbers of frames. Only higher end plasma sets offer this feature, though.
LCD, on the other hand, had two problems to solve. One was the judder complaint, the other was the fact that LCD panel persistence was still annoying many customers, in that fast-moving scenes looked blurry. Early this year, a new feature was unveiled that addressed both issues, 120hz. Unlike the plasma solution, it only used one constant refresh rate, but like the plasma solution, it allows for video and films sources to both be displayed with a smooth, even frame rate, and no judder. And, it corrected the motion blur problem -- sort of.
The problem with 120hz LCD sets is that the engineers went too far. In addition to evening out the frame rate of the sets, they also decided to add adaptive motion interpolation technology, which means that, instead of simply repeating each frame of a movie five times (120 / 5 = 24), the TV displays ONE frame from the movie, then buffers the NEXT frame, and then CREATES four frames to go in between them. THAT is the cause of most peoples' dislike of 120hz sets.
Now, I don't own a 120hz set, so I can only speak with second-hand knowledge, but from what I have seen and read, some implementations of the adaptive motion technology are better than others (Sony apparently has the best). And more importantly, again based on what I've been told, on most 120hz sets that feature can be turned off (it is on by default).
The bottom line from what I've read is that 120hz is the future (DLP is now implementing it, and I've heard that LG has either just released or is preparing a model with the same feature). As long as we can disable the silly interpolation feature, and just get even frame rates from various video sources, I'd call that a good thing.