"Usually the only time you would use VGA is.when HDMI is unavailable."
Gah! Oh god no!
On a lot of displays VGA does two things. One, it is sometimes the only way to get 1:1 pixel mapping, especially at weird resolutions like the not-720p "720p" of 768p displays. Second, it tends to turn off a hell of a lot of processing, resulting is quicker response times and an image that is truer to what the original rendered image represented.
Both of these cases are not effected in the slightest by the presence of HDMI. Please stop spreading this disinformation around.
"If I have a 50 inch 9UK Panasonic plasma should I connect my 360 to it via VGA or HDMI?"
Head over to the plasma section and find the thread regarding your panel. Ask about 1:1 mapping based on input options.
To point you in the right direction though: Does HDMI on your display support 1080p? 1080p downscaled to 768p is preferable to 720p scaled up to 768p in almost every case. If your HDMI port supports 1080p, then set the 360 to 1080p and forget about it. If you can though, try out VGA. If you can get the Panasonic to accept 1360x768 over VGA, it is probably your best possible option in terms of image quality. A 360 VGA cable is like $7 on Monoprice.