Movies will run just fine over a VGA connection. The most important thing is that you want to make sure your plasma will accept its native resolution on the VGA input (oddly enough some TVs won't.) Your TV is probably a 1024x768 panel with non-square pixels, but check your owner's manual (or just post the model number of your TV here) to confirm. Then make sure that the video driver for your computer supports that resolution. You can feed the plasma a standard 720P signal and let it rescale the image to the native resolution of the panel, but the image quality will be better if you can get the panel and the computer running 1-to-1. If your TV does use non-square pixels, some players may not be able to handle this and will give you a distorted picture (people look too skinny.) However, there are a lot of players (and a lot of free players) that can accommodate non-square pixel TVs.
Once you set the output of the PC to the native resolution of the TV, you should be good to go. However, you could have issues with your TV overscanning (the picture does not fit the screen exactly) in which case, there are things you can do to correct this, but it is more advanced and you would be best served asking about it in the HT computers forum as it gets discussed there quite often.