How large of a TV are you getting, and how far away will you be sitting?
I have a 50" widescreen 1080p TV, and I sit about 10' away. Some DVDs look pretty darn good when upscaled to 1080p...others don't. It depends on the source material. That said, 1080p source material on blu-ray makes a noticeable and positive difference in my case.
If you never see a blu-ray, then I bet you'll be happy with the upscaled DVDs. However, once you see a blu-ray disc, you'll want a player.
I got a Panasonic DMP-BD60 for $200, and I think that it does a good job of upscaling DVDs in addition to being a blu-ray player.