Most PVRs, including Sky I think, stick with a fixed output and upscale themselves. When they show an SD channel they are then resposible for upscaling to UHD, not the TV. I don't think UHD TVs make a good job of SD at all, but broadcast and compressed streams look awful upscaled to UHD, especially when its handled incorrectly by the source. You would think that the PVRs would do a good job upscaling, but much like AV receivers, they don't.
In an ideal world you would have a tuner that only outputs the matching source resolution to let your TV do the processing.
Something thats interesting is the new OPPO UHD Blu-Ray player, it has a HDMI input for upscaling to UHD. I bet that does a decent job compared to a lot of TVs and it will be interesting what kind of picture that would produce with those TV channels.
Nontheless, it all comes down to what you use the TV for. If you are a 95% DVD user then there is very little point going UHD anyway. If you have 95% FHD Blu Rays theres little point. If you are starting to having UHD sources and maybe still some FHD ones from time to time an UHD tv makes sense.
The problem is, about 99% of people buying UHD TVs fit into beneath the first point, they still watch SD TV channels and like to use the ITV player in SD and that will look nothing short of abysmal on an UHD TV.
Obviously the more higher end TV you buy, the better other aspects of the picture will be and TVs like the Sony ZD9 are said to do best in class upscaling of SD material compared to others.
From the HDTVtest review:
Scaling Best we’ve seen on a consumer TV
Video mode deinterlacing Decent for SD; excellent for HD
and from the review of the same TV on here:
The ZD9 did a wonderful job of deinterlacing and scaling standard definition images, taking full advantage of the increased processing power and native 4K panel to get the most out of lower resolution content. There isn’t much even the most sophisticated processing can do with some of the highly compressed digital channels but with a good standard definition source like a DVD, the results can be very watchable.
But I have to say, I disagree with DVDs looking just as good on mid range UHD TVs. I think you'd need a TV like the ZD9 for that. They will look better on a mid range UHD vs a budget UHD one.
But I think unless you are buying high end, its still better value to buy a budget FHD TV vs UHD if your sources are often SD, even more so if they are still broadcast SD tv/streams. Especially when most people don't even sit close enough to take advantage of UHD.
But again this comes hand in hand. I would take a bet that the people also saying SD material looks good on their UHD TVs are also the people who are sitting a lot further away than optimal for UHD.