We watch DVD on PS3 all the time. I haven't noticed anything wrong on the pictures. Mine is older 80GB version with SACD capability.
Regular DVD on PS3?
I love watching BR on my PS3 but the picture on regular DVDs seems like it is zoomed in and just doesn't look right. I have looked and looked in the menus for a regular DVD video setting and can't seem to find anything that is adjustable. I still have a Denon 2900 for regular DVDs but am curious if anyone is using the PS3 for DVDs.