there is a large difference between av and the other two. AV cables send the signal at an analog quality which is 480i. The HDMI and component can put the signal at the same level (1080p) and quality. However, for the component to put out the same quality as the HDMI you need really good cables or the signal will degrade and it will look like it is lower quality. The HDMI is the easiest to get a good signal from because it is digital where as the component is analog. With the HDMI being digital the signal will either go or it will not. Do not be suckered into buying the HDMI cables with the gold tipped connectors because it will not effect the picture.
The best rule of thumb for buying HDMI cables is the purchase the cheapest and see if it works. Some good places to go for them are monoprice.com, and amazon.com. There are others but these two can get you started looking.
HDMI produces a slightly better quality picture than component as the xbox 360 is a digital source and HDMI is digital where as component cables are analogue. Therefore when using component cables the digital source is converted to analogue in order to transmit the data along those cables. In order to do that you will lose a little bit of picture quality and the picture will be slightly noisier but its not that significantly different. However if you have HDMI then you should use it as it produces a better quality picture.
Normally Id answer these questions but I've seen hundreds of them now,,,search bar, there are a lot of posts that answer this question perfectly.
Though HDMI does tend to be the better. And one of these posters is a bit wrong component and HDMI do not send signals at "the same level" and component cable quality has nothing to do with it, coponent is analouge just like av (which I assume you mean composite?) except it can transmit in HD where as HDMI is purely a digital signal.
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