yes- Upscaling works- I truly thought everyone knew that, otherwise I would have posted some more info.
Anyway, It's like the difference you see when playing a DVD full screen on your PC at say, for example, 640x480 res, or playing it at 1280x1024(or higher) res on your PC. Your (good) video card and/or CPU upscales out the jaggies- like anti-aliasing- and depending on hardware and drivers, can improve picture quality in other ways too (like de-interlacing interlaced video on some old DVDs that were lame conversions instead of remasters). DVD upscalers basically are like CPU/VIDEO card re-renderers, but over HDMI to Hi-def. Ever seen a movie like Toy Story on ABC over OTA(Over The Air) Hi-Def? The source video is not high-def, but ABC used an upscaler- and it was MAGNIFICENT on my brothers 37in Sceptre at 1280x720. And this is really the best option out there for anyone playing DVDs on a 1080P TV/monitor (next to an HTPC at 1080P of course- but alot cheaper and slimmer).
Besides the upconverting, the Philips units have USB direct and supposedly this new model is USB2.0 finally and can basically play almost any type of computer media file ( video (tho some higher/odd resolutions may not play), audio, pics, and compressed formats at that- although some report issues with certain resolutions of video) from a fast flash drive or external HDD.
Som reviews at amazon:
http://www.amazon.com/Philips-DVP5982-Up-Scaling-DVD-Player/dp/B000N254LU
And of course check the previously posted AVS forum thread.
ps- I would by one but I do not have a 1080P set yet.. Although being a PC Tech/system builder I would probably go the HTPC/PC route anyway just because I like PC gaming on big screen too...