There's differing opinions on the subject, but I'm on the HDMI upscaler to HDTV side. Considering what professional upscalers and other video equipment typically goes for, XRGB Framemeisters are really pretty reasonably priced. And the results are as spectacular as everyone says.
Basically, every HDTV has an internal upscaler. Most of them aren't that good, because they're not geared for 240p which most old game consoles put out. Upscalers do all the work so that your TV doesn't have to, and XRGB ones are essentially made for game consoles in mind. Some people like scan lines that old TV's have, and XRGB models can simulate that as well. But an upscaler won't fix everything, so the better video input you give it, the better the result on screen.
Modifying your console to put out better video quality will greatly affect your picture. If you can get RGB or component video outputs, you'll be seeing essentially a perfect image on your TV with a Framemeister. S-Video also looks great.
The Genesis (Model 1) and the SNES (Model 1) can both get RGB signals with no mods necessary! Just get the appropriate cables from a guy on eBay and you're good to go.