Hard to say on this one as it's really down to a personal preference. Some say they can't really see much difference between upscaled DVD and Blu-Ray whilst others (myself included) think it's a big step up in quality. *EDIT - sorry, saw you have your TV listed in your sig after I posted, it's a Full HD display and at 42" I would expect the increased quality between Blu-Ray and DVD to be quite apparent at a normal viewing distance for that size. Try out some demos and see what you think.
One thing is for certain, a large part of the Blu-Ray experience is the sound.