I just use the cables that came in the PS3 box, but most of the time the text is fine (then again I lie a few feet in front of the 30" TV
It improves the PSN store a bit cause all the stuff on the right is gone

If you don't have a HDTV, I recommend hooking your 360 up to a monitor. You'll need to buy the VGA cable to do this.

I never saw a SD TV have component connection. Do anyone here have a SD TV with component?

 I would think any game running in 720p or greater (PS3 or 360) would have to be downscale to run on SD TV. This results of making text harder to read. 

I hope your not considering wasting money of a 360 so you have easier to read text, that just sets you back farther from your Glorious 42" 1080p HDTV!

 Yes, my Sony Trinitron is a SDTV with component.  

Difficult reading text? I played in a 29 and in a 21 inches SDTVs before getting my HDTV, and the text was absolutely fine

High end TV's have had component longer then you have been alive (unless you are over 50) :)

my sd tv had a component connection. and if you want to go really far back my vcr from 1981 had rca multi rca actually.

back to component ... it did not make a difference as to which type of connection i used test was hard to read, until i got an hd tv, just before that i got an hd monitor, also worked well, but was a pain to find the proper connection cables, i borrowed some till i got the hd tv.

to qualify this, the tv i had was a sony trinitron 24inch flat wega edtv, the worst tv i ever owned... right now i have a surprisingly good philips 1080p lcd 47 inch with perfect pixel... (if you look for this tv get the one with 3 hdmi ports not 2, big difference in quality but not in price) I was originally out to get a samsung 46 inch at 720p. since most broadcast hd and games are native 720... they were sold out and no rain checks on the discount when i went to get it....the philips ended up being cheaper, and better looking.

I've had two SD TVs with component connections.  And you're correct about the downscaling... unavoidable.