First thing, make sure you use Standard instead of Vivid in the Picture Mode settings, which I think is the default setting for Sonys (could well be wrong there). After that, fix the settings in Standard, reducing things like the backlight, contrast, turning the colour tone to neutral, and reducing the sharpness a tad lower. There are other settings to fiddle with, too, like brightness, colour, etc.
I haven't got your Sony, but when I first got mine, the picture was "awful" on SD. However, after a bit of messing with the settings, I'm very happy with it.