Question of the week: Do upscaling DVD players improve the picture on HDTVs? Answer: Probably, but there's no guarantee.
The fact is that, even without a new DVD player, the image will be upconverted. Unlike old-fashioned CRTs, plasma, LCD, and DLP displays have fixed resolutions. When an HDTV built around one of these technologies receives a DVD's 480-line signal, the television upconverts the image before displaying it. If your DVD player does the upconverting, the TV doesn't have to.
Upconverting, or upscaling, is a complicated process. Some DVD players do it better than others. The same thing goes for HDTVs. And there's no absolute rule that promises that DVD players will always do a better job than HDTVs. In my experience they usually do, but the differences are seldom significant.
Upscaling at the player level has one theoretical advantage. If your DVD player doesn't upscale, chances are it sends its signal to the TV via an analog connection. The digital image on the DVD is thus converted to analog, then back to digital, before it's upscaled. That can't improve the quality and probably hurts it, especially if the connection is S-Video or composite video. But a really good HDTV might still upscale better than a mediocre player.
But it's worth remembering that, even if you've got the best upconverting player in the world, a 480p video stream upscaled to 1080p is still 480p quality. It simply lacks the information for anything better.
If you don't believe me, check out the images at the top of the article. I reduced the bottom one to 1/6 the size of the top one (the resolution difference between Blu-Ray and DVD), then increased the size again, approximating what a DVD's image goes through when upscaled to 1080p.