Take Stock and Upgrade Your Sources
You should upgrade all of the sources you care about to high definition. This means upgrading them so that they are capable of delivering 720p, 1080i, or 1080p program material, and buying HDMI cables to connect them to your television (DVI, an older high-def connection standard, is also acceptable. You can purchase DVI-to-HDMI converters to connect older HD peripherals to your new HDTV.) Avoid using high-definition component ports; otherwise, your HD video source will get converted from digital to analog and then back to digital again in your TV, lowering the picture quality significantly.
Cable TV: Cable TV subscribers should upgrade their service to high definition, which usually means paying an extra charge on top of the amount for digital cable. Similarly, if you subscribe to premium channels like HBO and Showtime, you should upgrade to the HD versions of those as well. High-def versions of local and cable channels have different channel numbers from their corresponding SD (standard-definition) ones, so you'll also have to learn a new set of numbers for switching channels.
On the hardware front, you'll need either a new HD cable box or a CableCard (if your HDTV or your DVR has the appropriate slot). With a CableCard, you can tune digital cable channels directly from your TV or DVR without requiring a box. Set your box to output 1080i or 720p, depending on your HDTV's native resolution.
Satellite TV: If you subscribe to a satellite TV service, you'll probably have to upgrade your satellite dish and your satellite tuner box or DVR. DirecTV now has 5-LNB dishes that receive signals from five orbital positions, as well as new MPEG-4-capable HD receivers and DVRs. All of those new satellites enable the company to offer high-def local channels in major markets, along with national versions of the major networks. Again, set your box to output 1080i or 720p, depending on your HDTV.
TiVos and DVRs: If you want to record your new high-definition channels in all their pristine glory, you must also get a new high-def TiVo or other brand of DVR. For cable subscribers, I recommend the TiVo HD, a $300 model that can support 20 hours of high-def recording (or 180 hours of standard-def recording), with dual tuners and CableCard slots. You can record two live programs while watching a previously recorded show, or record one and watch one live. The TiVo HD has expandable storage and a much better user interface than the HD DVR boxes provided by most cable services. If you subscribe to satellite TV, you'll have to get an HD DVR from your provider. Set the output from your DVR to 1080i or 720p, depending on your particular HDTV model.