I liked Hurt Locker, the psychological damage was conveyed really well. I prefered Body of Lies though as a package.
Avatar was just too much like the Smurfs for me - do you have the smurfs in the US?
Now if you want to examine all the effects of war on film then the HBO "Pacific" series was peerless. Harrowing, gut wrenching, mind blowing filming and all based on eye witness accounts. It also introduced me to John Basilone - probably well known to you guys but not so in the UK, he was one hell of a hero.