Ah, a HT question. I can talk to this! S-Video, as Noriaki has said, offers better picture quality because of the separation. It's actually the separation of the color and black and white parts of the picture, to be exact. The difference (visually) b/t composite and SVideo is instantly noticeable.
The best video signal you can have is Component (three individual RCA connectors) If that represents a "100% great picture", S-Video is about 85% whereas composite is about 50%. You'll see the diff. Definitley worth the $20 for the Svideo cable.