i think it is LCD's problem, bcuz i am using Samsung LCD, with Sharp BD-HP20, no problem watching The Dark Knight. My fren bought a new Panasonic LCD that time, and i brought my Sharp player together with same HMDI cables to play the same movie on his Panasonic LCD to let him feel the HD sensation, however the picture appeared to be grainy, very obvious. May be it's the setting of LCD, i dun know, but i'm very sure that same BD disc, same cable, same player, played on Panasonic it became grainy.

Generally if the movie already has noticeable grain, any adjustment (whether at the TV level or the Blu-ray player level) won't make a big difference. The grain will still be seen clearly.

Needless to say, the higher the sharpness adjustment  the grainer it will be. Similarly the higher the Noise reduction set, the less noise there will be, but then the picture will have a softer texture, less sharp.

Up to each individual to balance it to their satisfaction.