1.The component cables will allow a "better" picture in the sense for more information and better accuracy.A separate question is whether you'll perceive this as a "big difference" and that's going to be very subjective.To my eyes it's more of a "noticable difference" but certainly not the sort of thing that jumps out at you in two seconds flat from across the room.
2.Component is the latest one, and is the hookup needed to for HDTV's with progressive scan players and hdtv tuners.
robert, I have a rptv with both and i've noticed that the component seems to have "washed" out color as opposed to the s-video. The cables and inputs are color coded so no chance of mismatching. the s-video seems darker and more vibrant color. I'm stickng witht he s-video for now, but could it just be my tv?