Component.
I\'ve done the comparison between S-video and component, and while there is a discernable difference between the two, it is not as great as upgrading from composite.
Optical for audio, if you have a receiver that is Dolby Digital capable.
The sony brand cables should suffice, and are of a decent quality; you\'ll definately pay-through-the-nose for the Monster variety. Additionally, the Monster component cables are not coupled with audio connections, so if you are not using, or unable to use an optical connection, you will have no sound.
Good luck.