A few thoughts.
First, I would strongly consider a different LCD than a Sony. Yes, Sony does make fantastic CRTs (I'm using a Dell 21" with a Trinitron tube!), but their LCDs are not at the top really. I'd put Samsung at the top of the LCD pyramid and maybe NEC/Mitsubishi... Look for an LCD with a smaller benzel around it, the newer generation LCDs tend to have really slim benzels. BTW, many Sony LCDs use LG panels... (they don't make their own panels like Samsung and NEC do from everything I've read about LCDs). Some of the best deals on LCDs are from Dell with a 20% off coupon. I'd take a look at the following models - Samsung 181T, Samsung 191T (Dell 1900FP), Dell 1702FP (also a Samsung panel, I believe). I'm sitting in front of a Dell UltraSharp 1504FP panel right now, it's really a good one. Dell also carries NEC panels, take a good look.
DVI vs. Analog. You really will have a hard time telling the difference, if your card has good analog 2D quality (like a Matrox or an ATI). The image will look sharp, but with an analog connection you may see 'dancing' around the edges of some fonts, with certain font/background color combinations (eg white text on black background). Basically if you look closely you can see the signal isn't 100% perfect, and some pixels turn on and off. Under most conditions, this is very difficult to see, and if you've got a good 2D, you may not see it at all. But you may as well use DVI if your monitor has it, and you've got a card that supports it.
One caveat - a brand new ATI Radeon 7500 card with DVI recently purchased from newegg (the $53 Retail box one) didn't work with a 19" planar LCD - turns out it was the Radeon's fault this time, so it's being RMAd. Since I'm planning on buying a 7500 for a cheap DVI connection for this new Dell FP I'm using at work (to get rid of the 'dancing font edges'), this put a damper on my plans. I'll post more about this 7500 DVI thing (hopefully its just a fluke) within a week.
Hope this helps, good luck, once you get used to an LCD it is hard to look at a blurry CRT.