The PS3 has great sound quality. LPCM is an amazing thing and is just as good as DTSMA, etc...b/c it's essentially the same thing-a lossless codec. If you have HDMI capable equipment, then you really can't go wrong with the PS3. The only reason to fuss about it is if you need to see the fancy new lights on a AVR light up and say DTSMA or TrueHD, etc.
And it does upscale-quite well. I get 1080P on my tv as well when watching a DVD. I don't use it much as a cd player, b/c I prefer my 5 disc changer for convenience, but cd's sound great on it as well. I think there are a lot of people put off by it's price and it causes a negative view point. That, or they have seen it at a friend's house or store with a less than optimal setup perhaps...that could cause bad impressions as well. Or, it could just be that they didn't set it up themselves properly, lol.
I'm not against someone buying a separate bluray player, they look nice, may hold up longer, etc...but there's not much reason to buy one over a ps3 from a functionality standpoint unless there is a huge price difference. That's completely understandable, especially with the realities of today's world. As is not having an AVR with full HDMI capabilities.
Someone correct me if I'm wrong, but does anything even use deep color, etc, yet? I know some TV's have it and some players support it, but I've yet to see any media with it. I'm assuming, that since someone is complaining that the ps3 doesn't support it, that I'm merely ignorant of the fact that such media exists...please inform me if I'm incorrect. Otherwise, that too seems like a rather petty and uninformed argument.