So for a long time I was searching for an affordable upscaling solution for my PS2 because my LCD TV does a terrible job with 480i signals. When going from PS2 to my TV through component cables for games that don't support 480p (which is most of them), the end result is a poorly de-interlaced, laggy mess.
Now I had an 80GB PS3 for the longest time, and it did a decent job running most of my PS2 games. That being said, that model merely had software emulation for playing PS2 games and didn't work well with about 40% of my PS2 library.
So after doing extensive research all over the web (AVS Forums, Fudoh's site... etc.), I decided that I simply couldn't afford a quality upscaling unit. So I took the cheap route and ordered some $50 upconverter unit on eBay. That was a mistake. The thing didn't even do a better job than my TV at de-interlacing, and the picture it was outputting was soft and disgusting to look at. It completely crushed blacks too, destroying detail in dark areas.
So I got to a point where I had to decide whether or not I was okay with a good chunk of my large PS2 collection not being playable on my main gaming TV. I decided that I wasn't. So what did I do? I ended up trading in my 80GB PS3 for a GameStop factory refurbished 60GB PS3, popped a 500GB hard drive into it, and then set it up under my TV.
Now I have one box that does a pretty damn good job upscaling, and a great job de-interlacing my entire PS1, PS2, PS3 collection. I had always envied launch PS3 owners for this very reason, and now I can count myself among that elite company.