We just got an Panasonic SA-PT760 Surround Sound upscaling DVD player. The problem we are having is that while viewing DVDs over HDMI (720p), the image is very grainy and ghosted. Now when we switched to component (480p), the image looks 10x better and more clear, even at a lower resolution. THe HDMI cable is good because we tested it with our hi-def satelite signal and it looks very crisp on 720p.

The TV is a Vizio VX32L.

Any suggestions?

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I have a Panasonic DMREX85 upscaling DVD player and the image is outstanding. If you have another HD source that works through the TV perfectly well, then the issue is in the Panasonic unit itself.
I would suggest getting it exchanged under warranty. I assume the native res of your TV is 720P and that you don't have a full 1080P display.
I have seen faulty upscaling DVD players in the workshop but not the Panasonic ones (usually Samsung and Toshiba), but it doesn't make the Panasonic immune.
I can confirm that this is not the normal results for the Panasonic though as usually they are excellent.

Thanks. I have contacted Panasonic support to see what they thought about it before I request an exchange.

Yes, the TVs native resolution is 720p.