Willow, Sky are charging to upgrade to HD, currently I believe its 199 for tehbox then 10/month on top of what your subscription is.
FreeSat has just launched offering some HD content for free ( BBC, ITV etc) but you need a different box to receive it although you can use your sky dish and LNB(The bit on teh arm). I'm considering getting one as we have a spare 'lead' from teh dish from when we had multiroom.
To connect from the HD source to the TV you need to use a HDMI cable, this basically send the signal in digital format( both picture and sound together) to teh TV that then decodes and displays etc it. There is another set of wires that can carry HD but HDMI is teh way to go.
Just be wary that there are two standards of HD, 720 and 1080 there are pros and cons of both types.
You can get DVD players that will "upscale" pictures to HD. this means they effectively 'guess' teh missing lines. Some are meant to be very good at it and its a way of improving teh picture you already get.
One thing I've also picked up is that soem HD TVs are rubbish at displaying standard TV and seeing as this is what you will be watchiung teh majority ofteh time make sure you don't end up worse off for teh majority.
Samsung TVs are highly recommended by me (We have a 37", the church have 3x 40" and mother in law has a 32 and a 37" ones, all are brilliant). Sonys, Panasonic and Pioneer are also good. Don't fall for " this noname" chinky one has a samsung panel, it isn't the same quality of panel as the samsung TVs themselves.
Forgot to add, looik at
www.laskys.co.uk for cheap prices and going through quidco gets you another 2.5% off!