We watched 'You've Got Mail' last night. I felt the picture quality was quite good, though it did have a somewhat dated look (or maybe it's all of that America Online stuff that made it look dated?

). It did seem to have excessive grain here and there but I don't recall seeing any noise reduction ringing or other artifacts (but I generally don't look for that stuff, I try to just enjoy the movie).
I think most everyone will be quite pleased with this catalog release. Easily worth the $13.99 I paid. Plus it comes with the DVD 'The Shop Around The Corner', which we've never seen. We plan to watch that this evening.
EDIT: I just found this review:
http://www.dvdtalk.com/reviews/46168/youve-got-mail/
Todd is a bit harsher about the image quality. He refers to it as a "small step up from the previous DVD releases". Personally, I think it's a bigger improvement than a "small step up".
Mark