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I myself, even though I've recently bought a HD TV, are happy with DVD's upscaled through the PS3.
Yes theres a difference between watching a HD film, and a SD film, but does it spoil the experience in any way? Not really.
I did want BluRay to be the sucessor though, purely for space.
See I've had a mixed experience with upscaling DVD's. It seems if its not a newer DVD the movie doesn't seem to upscale very well. But newer movies look a lot better upscaled then on a standard DVD player. Still no where near HD quality but much better then composite outs can deliver.