The answer is really, you gotta try it all and see what looks best.
I am not convinced in the least that upconverting DVD players do diddly for picture quality improvements. A TV has a processor in it, the DVD players now have processors in them. They end up costing more, but then duplicate the work your TV is already doing. Why do it twice?
Take it off the disc with a decent player and send it component to your TV and let the processors inside your TV do their job. But, you have the more expensive upconverting DVD and now you feel obliged to use the circuitry even if it doesn't improve the image. Makes sense, but not really.
720p is better for motion as it provides more full & accurate frames of information while 1080i provides less frames with more detail in each frame. It just can't keep up when things start moving fast though.
If I must use an upconverting DVD - then go with 720p first... and definitely look at 1080i, 480p, and 480i. Each player is different and not all are created anywhere near 'equal'. Also make sure to hook up true HDTV to your display so you can see what the benchmark is that you are aiming for in a quality image.
Then don't stress at all and enjoy your stuff.