The upscaler in the PS3 is certainly top notch, but the deinterlacer isn't. Don't forget people, DVDs are encoded in 480i not 480p, so the deinterlacing is really important. Even more than the upscale, actually.
“An engineer explained to us that hundreds of ear impressions were gathered in the name of research, and while each one obviously boasted its own unique shape and size, one single characteristic remained uniform across the board: the entrance into the ear canal is not a perfect circle, it's an oval.”
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The upscaler in the PS3 is certainly top notch, but the deinterlacer isn't. Don't forget people, DVDs are encoded in 480i not 480p, so the deinterlacing is really important. Even more than the upscale, actually.