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Golden Master
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I've tried both VGA and DVI to my Plasma and I can tell you hands down the DVI smokes VGA. IIRC correctly, this is because VGA has to be processed/converted into an analog signal and then back again when it reaches its destination; resulting in some loss of quality. Whereas, DVI/HDMI stays digital all the way.
The "loss of quality" you describe should be hardly noticeable. There's something else in play. I've had long stretches of 50-75 feet VGA cords that were able to carry a high definition signal to various projectors. I doubt DVI/HDMI could do that without any adverse effects.