Since your TV is 1080p it is already upconverting every source to 1080p. Whether a cheap DVD player can do better than your TV can is unknown. My suggestion is just take your pick of all cheap ones and try it out at home. Take it back if you see no difference.
The Toshiba XDE-500 has excellent picture quality even without the enhancements turned on. It's not a great choice however if you watch anything that's not anamorphic widescreen for anything that is 4:3 ratio automatically is stretched to 16:9. If you TV can display the picture in "normal" mode while displaying high definition then you're cool. If your TV can't like mine, then you're stuck only watching anamorphic widescreen on the XDE. You can pick up a XDE for 80 bucks quite a few places now or maybe even cheaper at a Circuit City.
My other DVD player is a Sony NS75H. It's picture quality is ok at best, but the XDE blows it away. I kept the Sony to watch 4:3 ratio material.