I've tried both, and in my case, I can see the difference, but it's not big enough to buy an HDMI switch, or pull out the DTV every time I want to watch a DVD.If you can't even tell the difference between composite and HDMI, something is definitely wrong with your setup.
Maybe some of the programming you were watching was not true HD, many "HD channels" show only SD content.
As for the SD not looking as good as with dish... What? I've had both, and I actually think the DTV looks significantly better. I liked my dish interface better, but the HD here is fantastic, as long as you're watching something that's actually in HD (and it's a bitch to tell for sure).
I noticed a big difference in quality when I switched from H20 to HR-21, it appeared to me as if the upconverter program was much better.