The bottom line is the Virgin Media box is not that great and all that is happening is a poor picture is getting expanded to 46" whereas it was designed to be shown on a screen >28". Something has to give!
I personally would not butcher the settings on your TV to support it.
As a comparison if you could tune in your onboard Freeview you will see the difference the freeview is much better than basic cable TV, they should be the same, but there you go.
As I stated before this site is littered with "How can I get a better picture from my Virgin box".
I have freeview on a 47" Tosh and the picture is excellent considering it is SD and that is without playing around with it.