All fixed pixel displays (LCD/DLP/plasma) have internal scalers that convert from whatever resolution comes in, to the native resolution of the display.
Scaling is most definitely important, but it greatly depends on how well the scaling is done. Many here do ask about converting receivers, but those receivers typically don't scale, they just transcode from composite/s-video to component.
The new Yamaha RX-V2600 will be one of the first reasonably priced units that will use internal scaling to convert composite/s-video/component to HDMI. That will definitely be interesting to see.
But, there is still the question of quality. Since fixed pixel display devices have a built in scaler, most DVD players are at least progressive scan, and HD cable/sat boxes can scale... which does the job best?
Going with an outboard scaler may be nothing more than a $1,000.00 paperweight added to the overall setup unless it actually outperforms the components that are already a part of the system.