I'd go with Panasonic. The step up model (and this goes for the Sony step-up model as well) will be identical in video; you just get more audio support, such as m-ch analogs.
Pana owns most of the patents associated with BD. They have excellent FW support. Their track record is very good. In the recent
shootout I linked here, the older Pana BD-50 was the only player that passed every HQV test. Not the S350, not the PS3.
I can only imagine that the newer models will be better, not worse. Only complaint about the Pana was it exhibited the most shift in color points.
as for upconversion vs Oppo, ya got me there. All I will say is after you get used to the BIG jump in PQ, you're probably not even going to care. Seriously. I've compared DVD playback between Denon, Toshiba, and Panasonic on my own display, and
subtle differences are there . . . but I don't watch DVD anymore.
Differences between upconversion quality between players vs BD and DVD are not even comparable, IMO.
edit: allargon brought up an interesting point about the S350. If its connected via SPDIF only, it is not able to transcode PCM to DD/DTS. See his post
here. Granted, I wouldn't lose any sleep over the titles mentioned . . .