Bluray, as a format, is streets ahead of DVD.
Just as with CD and DVD, the quality can vary, but this could be down to a number of things. The original master may not have been stored well, or might've been damaged. If it's been restored for Bluray, it'll look better than it ever did, but if it's not been 'cleaned up', all print damage will still be present. As long as the transfer has been taken from a high definition master, it WILL still look better than the DVD. DVD can look pretty good with up close objects, but try and encode the detail of a view overlooking a forest or city scape, and it'll fail dismally - it can't cope with small detail at distance. This is where Bluray obliterated DVD.
Of course, the quality of your viewing screen will also play a part, as well as it's size. Even on a 42" screen, if you know what to look for (as mentioned above) you'll be able to spot the difference pretty quickly between HD and SD, no matter how good the upscaling is. the bigger the screen, the easier it is to spot the difference. Pixel for pixel, if a 42" full HD screen was to show an SD picture with no upscaling, it'd be about the size of a 17" portable TV - which would look nice and sharp, but zoom in on that (like you would do a photo on a PC), and things soon become fuzzy and soft.
I will admit there have been some let downs this year as far as picture quality is concerned, like Alien Resurrection which looks like a DVD (not that anyone cares), Donnie Darko (budget film, so I assume cheap film stock), and One Flew Over The Cuckoo's Nest (I think I expected more, but again, a low budget movie). But overall, most of what I've bought this year (way too much!) has been stunning - Book Of Eli, the Original Nightmare On Elm Street and Friday The 13th, There Will Be Blood, Zodiac, Fight Club, Alien and Aliens, Good Night And Good Luck, Zombieland, and even Psycho, which looks stunningly good.
Due to filming issues, there will usually be a couple of scenes that look a bit rubbish - watching Edge Of Darkness the other day, a few scenes just looked out of place as far as quality is concerned.
Some films you just have to accept that unless they do a frame by frame remaster, that's as good as it's going to get until we get 4K2K - Bluray is the best video format we've had so far, but it's still no match for the quality of film, which is of a higher resolution. Personally, I can't wait - then we'll be complaining that upscaled Bluray doesn't look very good