Both 480i and 480p from a progressive player are upconverted to 540p. The conversion adds artifacts, although the new Toshibas are supposed to do a better job than last years models. To my knowledge, only Pioneer, Panasonic, and Mitsubishi allow native 480p.
The TV takes the 480P signal and upconverts it to 540P ... not because it results in a better image, but rather because it is cheaper to manufacturer the TV this way. The upconversion creates image degradation, but I find that it varies in intensity between units.
I thought that it was better this year than last, but I find that it is variable like last year.
In most cases, the degradation is small and unless you know exactly what to look for outside of test patterns, you will not really see it.
It shows up in the fine detail ... hair ... etc. Or rather ... it prevents the fine detail from appearing as sharp as possible.
Every set has its demon ... this is one for Toshiba. BTW, it is possible to do 540P with less degradation ... just look at Hitachi.
Artifacts is the broad term for anything added to the picture that is not supposed to be there. This can include purposeful artifacts such as sharpening of the picture or some form of "picture enhancement" that tends to make the picture worse. With poor upconversion the most usual artifact is softening of the picture. Even the best upconversion adds some artifacts unless its an integer increase of the pixels (example would be upconverting a 800x600 image to 1600x1200). Upconverting is easier when there's a simple mathematical change from one resolution to another such as 720p to 1080p in which it creates one pixel from 2/3rd's of a pixel. Changing 480p to 540p is harder to do since it makes one pixel from every 8/9th's of a pixel. Though 480p to 540p is getting better I find the use of 540p to be cheap and unneeded. Also besides the manufacturers Greg mentioned all Sony and Samsung CRT HDTV's can do native 480p. On a CRT display doing two rates is harder than one but in my view is worth the effort.
Just to clarify, I believe this is a fairly new Toshiba issue. I purchased a Toshiba 65h80 several years ago and my understanding is it does NOT upconvert the signal to 540p, but displays true 480p. Am I correct in my understanding?