1. Analog signals over the air will cease to be transmitted early in 2009, so you will only be affected if you watch television using bunny ears/antenna without a digital tuner. If you rely on bunny ears, you will need to purchase (a) a converter box to hook up to your TV or (b) a new TV.
2. Cable does not, if I recall correctly, have to stop analog tranmission at this date. The legislation is specifically for analog broadcast over the air - cable is exempt, obviously, because their signal comes into your house via wire. However, you can count on some cable providers cutting analog service just to get people to upgrade to digital.
3. All over the air signal will be digital. This does not necessarily mean the broadcast will be in high-definition.
edit: changed 2008 to 2009 in #1 above