To quote Jon S from the Post Your PS3 Upscaling Opinions here! thread.
I have just completed the HQV tests on the PS3 on firmware 1.8. The good news is that the PS3 now passes ALL the tests on the DVD, cadence, interlacing, artifacting. The output is clearly superior over my Denon 3930CI DVD player. The PS3 extracts more detail from standard DVDs over anything else I have seen. There are other options, such as 1080P 24Hz, white enhancing. The unit will out 1080P24Hz and lock in on the Mits HC500 and JVC RS1 with no problems. i have not tested the white enhancing yet but I assume it fixed the crushed gray scale issues.