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In some cases the upconverted SDVD looked almost as good as the HD DVD.
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I will agree with this statement in reference to my current XA2 and my previous A1. Both upconvert SDVDs extremely well... better than anything else I've seen or owned.
I cannot give you a technical answer, but I've read where generally the display units are not that great at upconverting and it's better to let the source unit do it, such as the HD or BR player... but again, that's more hearsay than anything else. I would prefer a more qualified answer. They could be making the display units much better now too, if they previously were not that good.