Yes component is better than s-video.
It goes in this manner from worst to best. (for the most part)
Composite, S-Video, Component (RGB), DVI, HDMI.
(DVI and HDMI offer about the same, but HDMI will also carry audio signals, and is a technology for future upgrades)
EDIT:: To answer your question. Yes some DVD players have DVI out, and or HDMI out. HDMI out can be used with a HDMI/DVI cable. Your projector has DVI in. So you could get a player that has HDMI or DVI out. The only players I know of that can do 1080i and even 1080p over component and HDMI is my player. The NeuNeo. I used to recommend the Oppo player, but stopped after one guy was not 100% thrilled with its performance. Also I read Clint's review of the Oppo, and I will say the NeuNeo does not suffer from the same problems. The one that really got me, was the power off test, and the dvd tray would not go back in???? Also the heat issue, the 2085 has absolutely no heat come from it at all. (to double check this, I watched 3 - 2 hour movies back to back (6 hours total) and the player was at the most 1 degree warmer than 77 ambient tempature). Also slow button response problems, etc..
Rambling....
Anyhow, back to the cable thing - Yes there are many players that have DVI and or HDMI out.