The differences in image quality are not so high between Composite and Component when you watch video. VGA seems to have best image quality but it transmits no sound (extra cable needed @ headphone out what's not optimal), you cannot charge iPad or iPhone during VGA output (okay that's more important with iPhone). The original Apple cables come shipped with a complete power supply and you can charge the device while playing video. Consider this if you plan to buy an iPhone maybe sometimes (I don't know maybe you have one already).
You can plug the Composite cable in almost each old hotel TV set of this beautiful world, but not all sets by far have Component or VGA inputs. So if you might use the video out function not only at home consider this. I am using Apple Composite AV cable since almost two years now.
Here you have some photos and a video demo.