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I just switched from composite to DVI on my cable box and the difference was minimal, you could only really notice the difference on the analog channels. Regardless DVI is better but i think that amount it changes is based on the quality of composite cable that you have. I had bought a nice one as I knew I would just downgrade that one to the DVD player so there was not that big of a change.
There are not currently HD DVD's but they are in development. The only thing close right now is a Terminator 2 which uses WMV 9 for encoding. You cannot play it on a regular DVD player but have to use a computer or some special one. The only real way to watch movies in HD is to get DirectTV or HD cable and watch them on there. There is quite a difference too.
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