There are two things that will help...
1. Exactly what you suggested - a better DVD with internal up-conversion to an HD format and a digital connection.
2. Get better DVDs. Bottom line is that many DVDs don't have very good video encoding and you want to be 100% sure that the DVD you are using to judge your image is of high quality. There are reviews of DVD quality available online at various places.
If you haven't seen HDTV on your plasma yet, it is time to upgrade your cable box or DSS and check it out. HD is the standard by which all your other viewing should be trying to reach. Not DVD, not digital cable - true HD. Either 1080i or 720p native viewing. Even within HD there are some shows that look better than others.
While it may seem a little frustrating at first not to get all the quality you expect from your television, you will be ahead of the pack as more and more HD material (and next year bluray?) comes along.