A very very good upconverting DVD player can make a pretty good visual difference from a normal DVD player.
Personally I have an Xbox 360 so I'll probably get the HD-DVD addon when a HD version of LotR or something I really want comes out, but I wouldn't spend a huge amount on a high def player at this point.
http://www.consumerelectronicsnet.co...jsp?id=91872-1
That's the upconverting player I've been considering.