What does the color temp setting (cool, normal, warm) on an LCD TV do?

Answer 1

It changes the "White point" color temperature.
Cool gives a more bluish white
Warm gives you a more redish white

Go to a white scene (say white sky or snow) and you will see what I am talking about.

All TV reviews are done with a white point at about 6500K (usually warm), since this is the white point of film. I find it too dark, but if you watch TV in a completeley dark room it is probably OK.

Answer 2

Nothing other than give you a different setting of how you like to view movies (cool = more blues, normal = just that, warm = more reds). Some people prefer different color tints. To be honest, all it is basically are preset color schemes that you can do yourself with color, brightness, contrast.