I have used a projector for a game table, even brought it to conventions, and it is a nice way to get the 'fog of war' effect from online tools like klooge werks or maptool, the two software packages I've used, designed for online gaming, in addition to just using a presentation tool and blacking out layers.
Projector throw distance.
Throw distance is crucial for a game table as often the minimum throw distance and ceiling height prevents you from using the projector to point it down from the ceiling. You really want a high ceiling and a throw distance as low as 4'. On the other hand, the shorter the throw distance, the smaller the projected image. I knew one guy (single, obviously) who actually cut a hole in his floor and ceiling and mounted the projector up near the floor (instead of the ceiling) and put an old laptop in there so he could get about a 6' throw distance, which gave him a 36" x 27" "battle mat". (A 4' throw distance will give you around a 24" x 18" projection, depending on the projector.)
First Surface Mirror
You can also use a first surface mirror to project horizontally, then redirect down to the game table. This will give you a longer throw distance when the vertical distance from your ceiling to table is below your minimum or desired throw distance. Even with a very high quality mirror, you will lose some light and thus image quality, and it's hardly usable with a standard mirror, because of the second surface refraction. It will also need keystone correction, making one side less sharp. I've tried mylar, which is an inexpensive first surface, but it's hard to get it mounted firmly so it doesn't distort.
Most projectors do not work well with ambient light. While you don't want to play in the dark, low lighting, shades, etc will go a long way to making the map look sharp and readable. For this reason, and so I can lock the room, at conventions, if I'm going to use a projector, I ask for small room, so there aren't other groups at other tables wanting full lighting. Basements tend to work best here as the ambient sunlight is usually easier to limit.
You can use a white table, or a foam board, but I find if you can get a shiny surface, the projection will look more crisp. I use a dry-erase board and it looks great and has the added bonus that magnets stick to it, so I can use magnetic base figures, though, I typically use the index card trick (see below), as it is most convenient.
I have also used battle mats, including clear ones, but its generally easier and looks better to do the grid with the projection. I've even gone as far as using foam and a foam cutter for 3-dimensional projections.
This is really important if you want to use miniatures. You will need to work out your software resolution and your throw distance (very easy to control in a static set up like a basement), so that the grid is ~1". Maptool has a "zoom" factor that is an easy way to tweak this. For a static setup, this will always be the same too.
Again, this is much more crucial if using miniatures. If someone bumps the table, suddenly all the miniatures can be in the wrong square. The heavier the table, and sturdier the mount, the better.
For a static map, you can have the players just move their miniatures as normal, but large maps where you have to slide the projection obviously don't slide the miniatures. One simple solution is to use the white side of an index card for the players, so you can just slide the card to maintain relative position and orientation.
Using miniatures is probably the simplest way to incorporate a projector, but it does have some difficulties. Also, there may be software features you want to use with a map token. Most often, I've run mixed games where the players used miniatures and as DM, I use map tokens. I typically use a "torch" token for the players, and set it to the minimum vision and light for the party. This allows me to use the software features and have the npcs already positioned and use aids (like maptool's vision, topology and lighting) to reveal as appropriate. I've also played with all players using tokens and laptops, so there's a central 'what everyone can see' and individual views as well (since often characters have independent types of vision or spot rolls).
I've even moved away from the projector to a high resolution monitor, with all the players using tokens. This works pretty will with the exception that I either have to pass around my mouse/keyboard remote or move the tokens for them.
However, to take full advantage of the online tools, you could also just play with no 'central' image around the table with a bunch of laptops. Just kind of depends on what you want to accomplish.