To my surprise, the DVD player in the Xbox 360 [xbox360firstplay, xbox360dvdplayer, xbox360ad] is pretty impressive. Compared to my Panasonic XP50, the Xbox 360 DVD player shows a noticeably sharper picture with stronger color when connected to my Samsung HL-R4667 [samsung1080i, samsunghlr4667wservicemenu, samsunghlr4667w, samsungpronto, samsunghlr4667wsettings, exchangesamsung] via component cables. The technical review at Secrets of Home Theater and High Fidelity also concludes that the 360 is indeed a very good DVD player. They mention that it only outputs 480p (720×480 according to the Samsung's Info button), but the resolution sure looks upconverted.
The 360's UI is amazingly fast, including chapter skips, fast-forward, and the front-end. Layer-changes are simply unnoticeable. Frame-rendered is also fast. Comparing panning scenes between the XP50 and the 360, the 360 seems smoother, with fewer dropped frames.
The 360's DVD player software does have a couple of minor flaws, including high black levels which require adjustment to the calibrated levels on your TV, and a "phantom" line of color about a pixel or two below the magenta and red color bars on the THX color test. I'm seeing some pink-ish pixeling in the blue skies of Tattoine on the SW:EP2 DVD, and I wonder if this is related.
Hopefully Microsoft will patch the flaws sooner or later, as there is no reason that a 3.2GHz triple core machine shouldn't be the most powerful DVD player ever made. Maybe they'll consider adding 1080i upconversion, as well as make an HDMI cable available.
Compared to the Samsung HD950 and Panasonic S97 upconverting DVD players I've "borrowed" from Best Buy, the Xbox 360 is right up there with the best DVD players I've used.
Sadly, however, the quality of the player emphasizes a critical flaw with the Xbox 360: it is an extremely loud machine, well beyond the noise levels you would expect from a device that belongs in a music room or living room. What was Microsoft thinking when they made this thing that loud?
UPDATE: I had one of the "Cinema Modes" enabled on my XP50. After disabling it, the picture is now almost as clear as the Xbox 360.
