I've been pondering this also. My 42" plasma only supports 780p through the PC input, so I've been wondering if using the X2VGA (or similar) and plugging that into the PC Input would allow for 780p. Currently though, the Xbox isn't connected to the plasma, so it's really not that important to me.
Is playing xbox in higher resolutions, albeit on your PC monitor, worth $40 extra? For me, I wouldn't use it for my monitor. But if it was going to be hooked up to the plasma at all (or most of) the time, then I'd go for it.
Edit: I have the MS HD AV Pack, but if I set the xbox to 780, then I get garbage on the screen. And 480p doesn't look any better than normal, even with the composite cables. (Atleast to me).