Video: If there are enough quality inputs (RGB, composote) on your TV, connect DVD and sat directly to it. If there are to few inputs, or to avoid low quality ones (composite, s-video), it may be better to use receiver as switch. Some also prefer this switch for convenience.
Audio: Connect DVD and sat to receiver. Coaxial digital if possible. Optical digital is also good. If neither available on sat, use analogue interconnect.