can anyone help

have the following
Panasonic dvd-s54
panasonic th-42pv7az
yamaha rx-v765-with 7.1 speakers wired up
mysky

use hdmi cables from mysky and dvd to av receiver then to plasma

when watching tv all speakers work - when watching dvds back 2 speakers often dont
think i have played 2 dvds that all speakers played

Have i set something wrong?
thought av receiver upscaled all sound to 7.1?

would blu ray give me a better picture on my set up ?
does blu ray run 7.1 sound all the time or 5.1
looking at Panasonic BD-60 or BD-65 or PS3
any improvment/advice on players

cheers