I too use a PS3 as my HDDVD playler and I was most impressed with how much better regular DVDs look on it. In fact that jump is farther than the difference between HDDVD and regular DVDs. I still watch mostly regular DVD because my son works at Blockbuster part-time and that's what he brings home. Employees get first crack at the new releases a week before they hit the shelves.
I switched from Blockbuster to Netflix because Netflix rents Blu-Ray...And I don’t have to go to the damn store AT ALL.
I use the PS3 as a DVD player too. It works great on upscaling, and my favorite feature is the 1.5x fast forward. Its like all the actors are on speed.