If it's not the set calibration, (always calibrate! DVE or use this free set from AVS: http://www.avsforum.com/forum/139-display-calibration/948496-avs-hd-709-blu-ray-mp4-calibration.html) then perhaps it is the player. Check the settings and make sure there is not some option checked that causes unnecessary processing.
My old PS3 always does a great job at upscaling, but I hardly ever use this function as I'm still a CRT nut.