couple things:
to do it right with JUST hdmi, you will need a new receiver as its audio and video in the stream, many devices puke up when using optical outs for audio and HDMI for video or have limited functionality.
The SOLE purpose of HDMI was to introduce HDCP (horrid copy protection) to protect macrvision protected media and others from being upcoverted and copied - ie all SD DVDs, etc.
To make it even worse, compliance is a little iffy with the formats and you can have movies that dont make the HDCP link because the menu isnt coded right, but wont let the movie start because its having connection problems
The good thing is HDMI is DIGITAL - so for the love of baby jesus dont buy the overpriced monster and best buy cables - try monoprice or bluejean cables on the tubes.
If you have an older HDMI TV (ie 1.0 instead of 1.2,3,3a) it just wont work...
Basically if you are a legit user (ie store bought everything) you need to go HDMI as you wont be able to upconvert movies past 576p. You better have a fairly new TV (18 months) and a fairly new audio system (12 months)...
Oh and the cables are fat causing some install issues in large rooms.
I guess its more of a movie thing with me...but this is the pain of a PS3 user I bet:
Buy PS3
HDMI cable at best buy for 200 bucks
Bring it home, wont sync with TV or downconverts to 480p due to lack of scaler
BluRay wont play over component (neither will hd dvd btw)
Buy a new TV that is HDMI 1.3a and 1080p
Oops TrueHD audio, others wont work via optical out
Buy a new reciever that is HDMI 1.3a compliant
Buy another new reciever that has the new HD audio formats
Play EA games that are a year old and one good shooter
(PS Ill buy one when FFXIII comes out, no worries)
If you pirate movies its not as bad, because pirated stuff has the macrovision stripped in the ripping process. This allows upconverions over non HDMI connections like component or older DVI interfaces.
Anyways kinda OT but HDMI isnt really a step up except for cable management with brand spanking new stuff.
Oh I play Wii/360 on a 120" 1080p 2:35 to 1 dedicated theater room for gaming and movies with a Toshiba HD DVD player and a shatload of audio gear...HD DVD/BluRay has been a total

ing nightmare and copy protection (DRM) can suck my ass.
If you are playing on a 26" Daewoo with your PS3, stfu kbai - you have no idea what im talking about.
Sadly Wii bowling owns so hard on a big screen...its like a flash game for retards, but it owns...Ive been playing the stupid thing for a week solid.
/rant off
/HDCP sucks
/HDMI is technically superior and digital, but was only created as a device locked copy protection to ensure no interception of media at HD rates