I have a Radeon 7500 in my Dell Optiplex machine at work, and a Dell 1702 FP panel.
I see no difference in text quality in going from analog VGA to a DVI cable. Perhaps it's the monitor, but the text was already quite sharp before the DVI cable.
I have a Radeon 8500 at home on a Dell 1800 FP. It's connected via VGA right now (the DVI cable is on my work machine above). Text still looks crisp. I'll try a DVI cable at home on the 1800 FP soon.
Give it a try, but make sure you can take back the video card if you don't think you see a big enough difference...