I don't own one, but I can tell you that there is a DEFINATE difference in quality.  BluRay I believe can run up to 1080p which yields beautiful, clear images/movies.  Once you go HiDef, you'll never go back.

anything to add on HDMI vs. RGB Component?  Thing is that I already have RGB component cables from a PS2.    Turns out they work for PS3 as well.

i just traded my Paintball gun for a PS3. I'll let you know of my first time out of the box experience when I get it (games are crazy expensive though...Man I just blew 60 bucks on Ratchet and Clank)

I have that TV, I forgot to mention that most LCD TV's only do progressive anyway. Just they way they are built. But you will only get 1080p on BluRay or HD DVD over HDMI because of HDCP.

The problem I encountered with hdmi and the reason I don't use it on my xbox 360 is (and it may be different on the ps...when you use hdmi your video and sound go through the hdmi cable right to your tv.  I use a 5.1 surround system connected to a 4 port switch via optical cable.  I had assumed that I could run the hdmi cable to my hdtv and use the TVs optical output to the surround system.  The problem is the TV optical out only puts out stereo unless you are watching a broadcast over the tv tuner.  So to get full 5.1 sound I have to use the 3 component cables and the optical out to my switch for sound.  On the 360 you cannot use the optical out and the hdmi cable, it may be different with the ps I don't know, just throwing it out there.

on the hdmi version of the 360 they put the hdmi port in a place so that the larger component plug (which has the optical port) covers the hdmi port.

http://www.gamestop.com/product.asp?product_id=802814

Use HDMI and Optical