kungfuchaos-
That's not accurate at all sir.
Upscaling is the process of taking a lower resolution image and "blowing it up" using some mathematics to a higher resolution.
ANY COMPUTER can upscale because its a inherently software process. What was a problem with the PS3 before was that there was a lack of software for "hardware supported upscaling".
This problem has been resolved awhile back though some older game titles still can't do 1080i properly I think I'm not certain.
This PS3 has the some of the best upscaling for movies on the market. The games are also quite good.
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