Does the computer have HDMI? If not, I wouldn't recommend getting a PC Blu-Ray drive. Your options for exporting the video signal will be significantly more limited and you might have trouble connecting it to your TV.
Do your parents play video games? If they don't, a PS3 probably isn't necessary. If they wouldn't mind purchasing a PS3 for the added benefit that you get to play video games, it might not be a bad suggestion. The PS3 is a phenomenal Blu-Ray player among other things. Great media server too.
Compared to getting a regular upscaling DVD player, Blu-Ray players are pretty cheap now. A good upscaling DVD player will run you $50, whereas you can find a decent Blu-Ray player for $200 or less. The Blu-Ray player will upscale all your DVD's, and it is guaranteed to upscale them to 1080p compared to some DVD upscalers which will not do that. Here are some pretty good standalone players
WARNING: I would recommend doing a little research on a player before you decide to buy one. Typically the newer the player is in terms of the model and when it was originally manufactured, the better. Less likely you will have to do a firmware update as well.
Samsung for $203
http://www.amazon.com/Samsung-BD-P1500-1080p-Blu-ray-Player/dp/B0014H16V0/ref=pd_bbs_sr_2?ie=UTF8&s=electronics&qid=1227754565&sr=8-2#
Sony for $220 (an older model)
http://www.amazon.com/Sony-BDP-S350-1080p-Blu-ray-Player/dp/B001A4LVYY/ref=pd_bbs_sr_1?ie=UTF8&s=electronics&qid=1227754691&sr=8-1
Panasonic for $233
http://www.amazon.com/Panasonic-DMP-BD35K-1080p-Blu-ray-Player/dp/B001GAOYCS/ref=pd_bbs_sr_3?ie=UTF8&s=electronics&qid=1227754735&sr=8-3#
And Wal-Mart has a Magnavox for $200, but that might be hard to find this time of year.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
