Receiver features
Pani,
Make sure you understand the difference between these two features:
Video Format Conversion:
Take a composite video, svideo, or component video input and output via component or HDMI connection. Reduces cables to the display but no improvement in picture quality. Even my low end Yamaha HTR-5860 includes this feature.
Video Upscaling:
Take a 480i or 480p input and upscale to 720p or 1080i over HDMI. High end Yamaha RX-V2700 and Denon 4306 receivers include this feature. There will be a video improvement if the scaler in the receiver is better than the internal one in your TV. Like you suggest, there will be no benefit to an HD source like upscaling DVD player, HD cable channels, or HD-DVD/BluRay.