1. DVI DVI DVI. It's not necessarily night-and-day, but there's a difference in clarity and quality.
2. Some LCDs scale down better than others. It's best to read a review of an LCD that features scaling if that'll be important to you. That said, if you're only worried about scaling for reasons of viewing distance and/or eyesight, you can often find an LCD panel which is a bit bigger but at the same resolution. A 19" LCD has the same resolution as a 17" LCD, for example, and a 21" has the same resolution as a 20" model.