<< How much better is S-video connection as oppossed to regular "yellow" composite video connection between the VCR and VIVO? >>
S-video is noticeably sharper, say ~25% or so, depending on the quality of your other equipment.
<< Just bought a VCR that does NOT have S-video in/out, and want to know if it is worth it to exchange it for one that has one. >>
I would probably NOT spend the money - if you are using your VCR like a "bridge" to connect the TV-out from your video card to your TV, you will see no difference whatsoever. If you are using the VCR to tape from your TV-out, then you will only see a difference if you use S-VHS to record, and then the tapes won't work in a regular VHS VCR.
<< Btw, the full screen (although 320x200 almost seem like DVD)on my ATI AIW does not seem as crisp (for TV and VCR) as regular TV, and was wondering if this is normal. >>
Perfectly normal. Regular TV resolution is less than standard VGA (actually broadcast TV is more like 300 horizontal lines of resolution) that's why 320x200 doesn't look so bad, but scaling it up to God knows what results in a fuzzy picture.