Have a read of fulabeer's S3 thread in the video forum. I think tbrar and gandley may have also contributed with some good stuff.
basically, via DVI the image is sharper, noise free with better colours. Overall it's just more vibrant and an overall better pic (generally anyway). My HTPC via DVI is quite a lot better than my Tosh SD900E via component. DVD player still wins though due to ease of use but hoping to get one of the DVI/HDMI players soon (probably the new Tosh although may succumb to the 868i or A11 before then )