It would seem that spending £ 700.- on a DV78, with my current 32" CTV, would not be a worthwhile upgrade until I could also afford a new TV. If the improvement in audio quality over my Sony 735 would also only be marginal, I guess a DVD upgrade, at this time, is not totally necessary.
The Arcam while no great shakes in picture performance improvement over a Sony 735 (actually perported to be worse than the previous incarnation the 725 which differs ever so so slightly to a Sony 7700 of which both I have experience with) once customised you'll find you'll be watching the Arcam instead!. Given comparison of DV89 and DVP-S7700 the Arcam was preferable it is possible that the Arcam DV78 will see more improvement over the 735 than the others especially if HDMI is utilised.
Comparing a DV89 to a Sony DVP-S7700 using RGB out gives much more vibrant and fruity colours with less hard edges and finer colour differentation giving some scenes greater detail.... Star wars, attack of the clones, chapter for the *vehicle* race shows this well.
The difference isn't startling, the Sony having richer bolder colours (which tends to hide finer details), however it makes for a more interesting relaxed watch.
The Arcam sound has better kick and attack with greater bass resolution but the Sony has more and deeper bass.... but again due to this losing finer parts of the audio signal.
The Arcam works best through component utilising it's progressive scan capabilities where it is a step up from RGB. Naturally the DV78 does HDMI which should even be a further improvement. Judging by the clarity of HDMI as seen recently on a Plasma set things should be a good step forward over component.
So basically if you are thinking of upgrading you do need a TV with these i/p's to bring out the best. An old Sony may well just convert RGB to S-Video before it gets processed as I have a feeling my 5 year old Sony does as the difference between the two are negligable.