dvi to HDMI, becuase they are the same(1080p max), but HDMI transmits sound also.
that is the best, followed by RBG(1080p max), then component(1080p max), s-video(480i max), and then composite(480i max), assuming you arn't running cables longer than 25 feet, then component would be the best.
and for the processcor, a c2d would be overkill, but it would be fun to be gaming on the couch. (I personally would just go with a amd athlon x2 4200+)