Personally I'd avoid upconverting. You can't completely fill a 10 gallon bucket with 5 gallons of water no matter how fast your pour the water in.
The DVD Player should be set to progressive scan, which should output at 480p. If you must use upconversion I'd choose 720p in this case simply because it is progressive and is closer to the native resolution of the DVD. I have a samsung 1080p TV and I have my DVD player connected through component cables-I think it looks really good, but I'm free of OCD.
