Ok here goes, this is what I saw. We used a Sony 40 inch LCD (not sure of the model but it was 1080) Initially both the PS3 and my Denon 1940 where set to 1080p so the players where doing both mpeg2 decoding AND upscaling. Without a shadow of a doubt the PS3 was a considerably better picture. Very rich, solid and full. My Denon at 1080p was a little lacklustre and laid back. I was GUTTED!
I was curious to see them both at 576p so that the players where both only decoding mpeg2 and de-interlacing, in this case the display was up-scaling. This time my Denon looked MUCH better than before, far more colour, richness and fullness, much more similar to the PS3, not so much in it this time. In this case the PS3 I would say still had the extra slight edge on colour richness but the difference was not as huge as when they were both set to 1080p. Not enough to make me feel dissapointed this time.
My conclusion? The PS3 clearly has a far superiour upscaler than the Denon without a doubt, so if I had a display with a poor scaler id go for the PS3, however if the display has a very good scaler and fed a 576p signal, Id be happy with either machine. In my case I don't need upscaling Im still using a Toshiba 32ZD26 CRT (which I love btw) via componant so for me the Denon 1940 is fine.
Just a couple of my own thoughts here. I would mention that the power cord on the PS3 was better/thicker wheras the power cord that came with my Denon is a real crappy thin cheap thing & I
know that a better quality power cord does make
some degree of difference. Also the PS3 had been on all day and properly warmed up wheras my Denon came in from the cold. We know electronics work better when at their proper operational temp.
All in all, Im still happy with my Denon 1940 but am
extremly impressed with PS3.