Why does Standard Def look so terrible on HD monitors/TVs?

We have an HDV camera and when we shoot and edit in HDV it looks really good on our 16:9 Panasonic HDTV we use as a client monitor when editing. But, the vast majority of times we have to either down-res to Standard Def or shoot in Standard Def as most of our clients cannot use HD yet.

That being said, we have a Standard Def field monitor we can also use in the edit suite, but it's only a 9" screen. I don't like using the Panasonic HD television as a client monitor when editing in Standard Def because the image looks horrible. Why is it that Standard Def images looks so terrible on HD televisions? I notice this when I go to an electronics store as well. If they're sending a Standard Def signal to the display televisions it's no wonder many people aren't willing to move up to HD. The image looks much worse than it would on a Standard Def television. Is it because it's an interlaced signal and the television is converting it to progressive?

When you send these TVs a true 720p, 1080i, or 1080p image it looks amazing. Just wondering what causes the poor quality with SD images.