That's the one and only tragedy about HDTV. I have yet to see a scaler that does a perfect job, but I'm sure someone here knows which does it the best. The source image is just too low-res HDTV, whereas before it was higher-res than your SDTV and looked great.
Lower grade scalers often produce excessive smoothing or uneven smoothing, making the image even worse... I'm not sure what you can do about it. Pray for faster HD broadcast adoption? Anyone?