First, you should be using Microsoft's 1st party VGA cable to ensure the highest quality.
Second, you will need to purchase a calibration DVD like Avia to get the most out of your VGA connection. When I calibrated my TV using Avia for both component and VGA connections on my 360, I noticed that they use different settings. What may look good in component doesn't necessarily apply to VGA, so VGA connections have to be tweaked to remove problems such as blurry colors. It's worth it though for the upscaled DVDs.