Regarding the DVD player - I would personally wait a year or two before taking the plunge on a Hi Def DVD player. With two competing standards (HD DVD and Blu Ray), and virtually no Hi Def format DVDs available yet, I think it's better to let the dust settle on which format "wins" and prices come down.
A Hi Def DVD player won't do anything to improve the output of a standard DVD, so a solid, inexpensive DVD player will do you fine in the meantime.
As for cables - I have been more than happy with component, and most folks don't seem to see a substantial difference in picture quality vs. HDMI. That being said, if all of your gear will already support HDMI, you may as well go for it.
A Hi Def DVD player won't do anything to improve the output of a standard DVD, so a solid, inexpensive DVD player will do you fine in the meantime.
As for cables - I have been more than happy with component, and most folks don't seem to see a substantial difference in picture quality vs. HDMI. That being said, if all of your gear will already support HDMI, you may as well go for it.