Make sure you have the latest firmware. The default settings for the PS3 upconvert from 480i to 1080p. The improvement after the firmware update (1.8?) was substantial.
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.