It's just a matter of time before Toshiba officially announces the death of HD-DVD. More and more companies are abandoning the format (including Best Buy, Netflix, Warner Bros., Paramount, and New Line), so there's not much reason for them to keep dumping money into a sinking ship. Bring on the cheap, multi-format players!
Does the PS3 with it's Bluray player also play old-school DVDs (and upscale them)?
Yes, though not as well as a quality stand alone player.