The video upconversion doesn't make the picture any better. It just allows you to use the receiver as a central switching point. Say you've got 2 devices with S-Video and one with component. But you're TV only has one component and 1 S-Video. The upconversion will allow you to connect the receiver's component out to the TV and convert the S-Video sources to component to go to the TV.
I run everything through my recevier. I feel it's a lot easier to click "DVD" on the receiver, then to have to change the TV and the receiver. I have enough power switches to turn everything on, I want to save a click somewhere.
