I have a Panasonic TH37PX70, which is a 720 set. I recently bought a Sony 360 BD player and have noticed the same as you. My old DVD player was a cheap Panasonic, which didn't upscale. That old DVD player vs the same film in Bluray played on my Sony is very different, the Bluray is much better. Tested it with Dark Night on DVD and Bluray
For me, as its a 37" screen I'm happy with the PQ on Bluray, and think the £120 investment in the BD player was worth it. The only thing I am confused about is what settings to have the BD player on, as well as my Humax Foxsat HDR. Either let the peripherals do the upscaling or let the TV.