How about a Denon 5910? You should be able to pick up a non "Ci" version for less than $1500.
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If you like Sony, you may want to look at the DVP-NS9100ES. I have one and it is capable of upsampling to 1080i. I have a Sony "HD" crt tv with 720p resolution (I think). Anyway, the picture through component video is excellent and the player supports HDMI. They are pretty cheap used, usually around 450.
Thanks everyone for the response. I know they will all do a fine video job, but I am also very concerned about 2ch audio playback (redbook CD). As I mentioned earlier, I am space limited and really can't do 2 boxes. I saw the Arcam is using Wolfasn Dac's and the Denon 3930 is using Burr-Brown dac's. Which one is a better audio player? I am guessing the Arcam? I don't know much about the difference in Wolfson vs Burr-Brown?
Agreed about the PS Audio DL III. I owned the benchmark for the past few years and loved it before I let it go thinking it was going to be a wise choice. I decided to give the PS audio a shot, and man o man... what a piece. Not saying the Benchmark was junk by any means. Just warmer and detailed vs HIGHLY DETAILED. Cant beat the upsampling as well....