Hi Mikeyboy.
I have the same TV/V+ combo as you, and was also a bit surprised by the picture at first. I quickly realised, however, that during the installation the guy had somehow managed to reset the PS3000 to factory defaults and all my carefully managed contrast/brightness settings were lost. Just be sure you don't have the picture set to 'Vivid' or anything, and that the brightness/contrast settings are OK. I have mine set to Cinema, with a contrast of about 70 and brightness about 55. Once I'd reverted these to something like they were before the installer started fiddling, the picture was far better. Having been a long-time subscriber to Sky/SkyHD previous to having Virgin installed, I'd say the SD picture is better on Virgin - significantly so in some cases. Don't know whether this is the general consensus, but it certainly seems that way to me.
I haven't really been able to identify any difference between 720 and 1080 in the V+ settings either, other than the menus being sharper when set to 720. Overall, I'm very pleased with the picture quality - just needed a bit of fiddling to get it there!