Hey Geno-
I had a similar experience recently. Hopefully my story will put you at ease a little. I too bought a Sony Bravia, though much smaller...I got a KDL-26S2000. They had them on sale as the S2010 had just been released. Anyway, same sitution; got it home and was totally bummed. The "label" at the bottom from the cable box that says your channel/time/info was really pixelated. Looked bad. Also, the picture quality was, understandably, not good at all.
So, I turned in my cable box and picked up their HD version for free. Wow. What a difference. I hooked it up via component (you can also use HDMI) as I learned that these 2 ways are the only way to get the digital signal. May not be news to others, but it was to me. I was so used to just plugging that traditional black cable (with the screw-on end) into my tv. When I booted it up and watched it for the first time I felt much, much better. It was receiving a 1080i signal, and even on SD stuff, the pic was markedly improved. The info box at the bottom is like looking at a computer now. And the HD channels?
Hope that helps. I guess that's a long way of saying that my switch to the HD box made a huge improvement, and hopefully you'll see the same. Good luck.