I used my PS2 as my primary DVD player for years until recently.

How does the PS3 fare on DVDs? Can it upconvert? How is the image and audio quality?

I have a 42" Samsung Plasma.

It does not upconvert, will only play in progressive 480 (480p). Same as the ps2.

But DVDs are 480i, so I'm assuming it plays 480i/480p?

And if that's the case, how is the image/audio quality? I'm basically weighing the cost vs benefit of buying a PS3 vs a standalone high-quality DVD player.

Blu-Ray is just an added bonus.

Also, is there a chance that one day down the road the PS3 could upconvert? I mean, it seems like it should, seeing how as it already has the ability to output HD in 1080p.

Go to the PS3 section, there's plenty of talk about it. From what I can tell, the PS3 does a good job with DVDs, it just doesn't upconvert. But, as you said, DVDs are 480 to start with, so if your TV has a good scaler, it doesn't matter. People are expected that feature to be added at some point, but I don't think there's an official date for it.

I'm pretty sure I'm going to get one as a Blu-Ray player and will also use it for any DVDs that I might still watch.

Didn't know there was a PS3 section, thanks.