You don't get proper surround from sky through HDMI though, so your best to use you optical cable for that, then you'll get full surround.
I have the Onkyo TXSR705. Banging amp. Also got a Dennon amp upstairs thats also sweet as. Gotta love these surround amps.
Up-scaling to 1080p doesn't really mean anything though. All that's doing is stretching the native picture to fit a 1080p screen. So, depending on the TV your using, you may be best using the screen to do it.
e.g. The upscaling on a £1000 TV will be better than the upscaling on a £1000 amp, because thats what the TV is supposed to do. Its what its made for. The amps isn't made for this purpose primarily, so it will be worse. It is, afterall, there primarily for the sound.
This obviously depends on your tv though. If your running a Teknica or something, may as well let the amp do the upscaling, but if its a halfway decent tv, (Pioneer, Panasonic, Sony etc...) it'll have the better upscaler anyway. In which case, you want to set the amp to pass through the picture at its native resolution, and let the TV do the upscaling.