Does connecting dvd player or receiver through HDMI port in tv, make the picture better?

Chris L gave the best answer so far - you wont see too much of a difference with HDMI until you update your sources to HD. And DVD players do not have HDMI ports unless it is one of the strange 'up-converting' DVD players. (You may as well get a BluRay player as they do up-converting as well). And your cable box wont have HDMI output unless it is a HD box. Update your cable box to HD. Should not cost much. Ask if the cable box comes with a HDMI cable. Order some "Media Bridge" HDMI cables from Amazon for $9-$20 if the cable box does not come with these cables.

HDMI is a exact digital copy, so generally the output is going to be superior to most component cables the only way a component cable could be similar in quality would be to spend big $$$ on very expensive cables, then they come close, but still won't be as good.

Your HDTV is a 1080p model with HDMI inputs. The best picture will be obtained with an HD signal connected via HDMI (from either an HD cable box or satellite receiver for TV or an upconverting DVD player or a Blu-ray player). Note I said, upconverting DVD player since they internally convert the DVD video to pseudo HD and output over HDMI. A conventional progressive scan DVD player can give good (but probably not as good) results if connected using Component cables (red.green/blue coded triple RCA cables) ... which your TV also accepts. However a non progressive DVD player can only output a 4801 signal over composite video (yellow RCA) and will give -- as you have discovered -- a relatively poor quality image. You options are to use Component (assuming you have a progressive scan DVD player); use HDMI if you have an upscaling DVD player; replace your DVD player with an upscaling DVD player (not advised); or, move to a Blu-ray player. The latter will play both Blu-ray disks at 1080p (best quality video available) and upscale DVDs to pseudo-HD (same as an upscaling DVD player).