Here's an example...maybe it will help. When I watch DVD's through the Xbox, they all play at 480p. When I play games through the 360, then they follow the resolution that the game is capable of, i.e. 1080i, 480p, or 720p.

DVD Players that upscale, would generally upscale the signal from 480p to 720p or 1080i (most LCD's, Plasmas, etc. can support this -- at least mine does). There are a couple of players out on the market that will upconvert to 1080p, but they are still fairly expensive, and you would require a TV/projector that is capable of handling 1080p (another expense).

If someone were to be looking for a TV capable of handling 1080p (again, expensive) then you might as well just get an HD-DVD or BluRay player (again, fairly expensive, unless you want a buggy Toshiba). This way, you would be getting true 1080p through your player, and your tv wouldn't bat an eye.

Hope that helps a little.