Forgive me if this question seems a bit "stupid" however am I right in assuming that old films appearing on HD-DVD and Bluray will be "converted" or "upscaled" in some way for the new resolutions available.

I find if I play a standard DVD in my PS3 it is actually marginally better quality than when I used to play it through a standard Sony DVD on the same TV, the colours are slightly better at least.

If I buy for example Full Metal Jacket or Gone in 60 Seconds on Bluray, am I really going to get any benefit paying at least £18 or for older movies not originally recorded in HD should I just hunt the sales and the DVD version most likely for less than a fiver in most cases?

Even an old film on BD/HD DVD format will be better than on DVD due to the fact that HD images are taken from the film master which is of high quality.

On a PS3 no upscaling as I undertood it takes place and is displayed at 576p. On my TV it is better playing a normal DVD on a standard DVD player as the TV upscales on the PS3 it does not.

ITYM "may be". I expect that a lot of films will be churned out without remastering.

Look at the Searchers for proof of picture quality on HD/BR, absolutely stunning, remember most masters especially restored ones are of cinema quality and look as good as new movies, especially if they are'nt effects heavy.
The PS3 should be getting an upscaling update very soon, look out for it.

Cinema films are made on 35mm film which surpasses the quality of any HD format.

So as long as the print used is of good quality ,even without remastering the HD disc will be better than SD dvd

No the PS3 doesn't do any upscaling itself but your TV must do otherwise you'd only get a little picture in the middle of the screen.
Personnaly I've found the PS3 to be better at playing DVDs than my old DVD player (old Sony mid-range model). I suspect this is because there is no analogue signal conversion going on. (Old DVD -> Analogue SCART -> LCD vs. PS3 -> HDMI -> LCD).

Just wanted to add that this is only relevant for cheap displays that don't have good upscalers built in.

So long as ... what chance of simply re-using the DVD digital copy? Excuse me being cynical but it could the the 1980s and back-catalogue reissued on CDs all over again.

Then it isn't HD

As with all things waiting a few days and reading reviews of the discs (both formats are being closely followed on the net) and any issues soon come to light.

The Blu-ray of Fifth Element was taken from the same master as the DVD Superbit and proved unacceptable for HD, now it was one of the first releases so perhaps some leeway can be given but that info soon come to light on the net.
There was a HD-DVD (can't remember the movie) that was claimed to be an upconvert from an SD source and that is simply wrong.

Bottom line is an upconvert shouldn't look as good as a genuine movie from a HD master although as been said there are movies that have been sourced from a fully restored master and those taken from an existing master.
The age of the original movie and the quality of the film stock then plays a part in the final results but these days films even shot on 35mm tend to be digitally stored.

Casablanca looks amazing in HD.

Even if a new film transfer is done the quality may still be poor if the source used for the transfer is a worn-out and damaged release print, as opposed to a frame by frame restoration of the original master. This happens very often, particularly with films shown on TV.