I hate to bring up such an old thread, but it has had a reply in the last month so here goes.
I just recently purchased an HDTV
http://www.sonystyle.com/is-bin/INTE...tion_42to51TVs
and I too am running into the bars on the top and the bottom, stretching the image works just fine, as well as leaving the bars in place since with the screen size it really doesn't bother me that much.
My owners manual said I do not have to worry about screen burn in from static images that are up for extended periods of time, I guess only time will tell, it is an LCD projection screen TV.
Also input on the component out cables for the PS2, again I know this is a bit old, but you can find them just about anywhere now and for quite less than the prices quoted above
http://www.gamestop.com/product.asp?product%5Fid=801798
that works with both the PS2 and xbox, they also have cables out for the xbox 360 here
http://www.gamestop.com/product.asp?product%5Fid=802111
I have a Sony progressive scan 5 disk dvd player, and used to have it hooked up to my old tv with s-vid, now using component cables I am blown away with the quality.
one last note, the older model first gen PS2's did not have progressive scan capabilities but it was included on newer models in the past few years, so if you have an older system you may not be able to do the progressive scan output mentioned above.