The difference between HDMI and VGA is that HDMI is digital, VGA is analog. This does not make HDMI better. It's not like you are making copy after copy of that analog signal. It's only going from your PC to your TV. If you've got a decent cable, you aren't going to see one bit of difference in picture quality on VGA vs HDMI.
Think of it this way. Component cables are analog in the same way VGA is. This doesn't mean that the picture quality is sub par compared to HDMI. It just means you have more cables to hook up and hide.
Stick with VGA and don't worry about using HDMI. I have a Linux box hooked up to my 1080p Samsung DLP which I use to play all the bluray and hddvd sourced 720p movies I download from newsgroups. Also HDTV shows, like Dexter. They look every bit as good over the VGA connection as they do on an HDTV broadcast.
Well, just to speak from experience, the difference for me between HDMI and VGA was like night and day. I would otherwise agree with this poster. For example, the difference between HDMI out and component out on an xbox is negligible. However, for whatever reason, the difference between DVI/HDMI and VGA on my Macbook Pro is tremendous.
I have a 50" 720p Pioneer Kuro. I have two equally quality cables from Monoprice: 1) DVI to HDMI, and 2) VGA to VGA. When I plugged in the VGA to VGA (using Apple's included adapter), I could barely read any text on the screen as it was far too blurry, I had aspect ratio problems, the colors were washed out, and the detail was blurred. When I switched to the DVI/HDMI cable, it was crystal clear. The text was sharp, the colors noteably different (much more vibrant and beautiful), and most importantly, the aspect ratio was spot on. I never see any bars on any sides.
I never checked how videos looked with VGA, but when I initially tested the cables, I could tell instantly that there was no contest. Any factor alone (e.g., the washed out colors, the blurriness, the aspect ratio) would have prompted me to use DVI/HDMI over VGA. I would highly recommend DVI/HDMI.