If you have an LCD, use the DVI. Honestly, I can't tell a difference, but I really haven't been looking that closely (the picture's gorgeous on a 2407 :beer: ).
With a CRT monitor, your VGA card would take the digital vid signal, convert it to VGA, and send it thru the VGA cable to your monitor's analog input (which the CRT can directly use).
If you hook up an LCD via VGA, you're converting digital to analog, sending the signal, and having the LCD reconvert it back to a digital (LCD's are digital based).
If you've got DVI capability on both your monitor and vid card, slap a DVI cable on there for a direct digital to digital transfer.
Theoretically, a DVI connection would be best. Subjectively, I can't tell, really...
PM