Anything High Def you want to stop using Composite Cables and go straight for Monster HDMI cables. For realz. Audio you're better served with a Fiber Optic or Digital Coax.
Yes, most High Def boxes do have HDMI Output. Yes, most 5.1 recivers have 2 HDMI in with 1 HDMI out to the TV, and a Digital Coax or Fiber Optic in. Yes, they are about 3-4 HUNDRED dollars.
Get Monster Cables. Let nobody tell you different.
The reason Standerd Def looks bad on High Def T.V's is because the TV's are designed soley for High Def, and thus, Standerd Def suffers. Standered Def doesn't have the resolution of High Def, so the TV has to fill in the gaps so to speak, so your image looks like a pixilated blur. It's watchable.... but I don't like it personally.