HDMI carries a much higher bandwidth than component cables which results in a picture that has less fast-motion-blur, and a clearer, sharper picture. HDMI also carries 7 channels of independent digital audio which the VGA cables do not. VGA support analog sound only and will not produce a picture any higher than 720p.
HDMI is going to give you a better picture, period, and it also carries 7 independent digital audio channels which results in a much better sound experience. Ultimately what you should use is an HDMI cable, along with an optical audio cable for your sound. I think you just have to purchase than cheap 360 dongle piece to hook up the optical, which will result in a sound quality higher than that of an HDMI cable.
EDIT: If you're thinking about taking your TV back and going with a 1080p then do it. You CAN tell a difference. Not to mention that all new technologies, games, and programming are going to be based on 1080p. So why sell yourself short especially if you're going with a full surround sound setup? 1080p is not that much more and you'll be glad that you went with it.
Last edited by BeerzGod (2008-04-11 22:54:43)