I got the PS3 also.
I have it connected with HDMI because HDMI is 100% digital so you get the exact signal from the PS3 and Blu-Ray with 0 degradation. It looks perfect!
In my system, I have the PS3 sound set to Toslink because I want to use my old Yamaha Audio Receiver to get the Surround Sound. I have several other HD sources, Cable Box, Video cards and have it all connected to my HD Monitor via a HDMI switch
This one also has 4 Toslink Audio inputs that allows me to switch to my AV receiver so I can get Surround using my old AVR.