Well as I said the input lag is sometimes something that can't be altered. It's definitely possible switching to VGA will help, but honestly I really can't be certain. If you can provide me with the model number of the TV I could search around and see what other people are experiencing/doing to help the input lag.
As for picture quality, it might be better. You can use higher resolutions with VGA vs the HD AV cables. Personally I use 1080p, vs the 720p HD AV cables provide. Most games are just upscaled 720p though, but that added resolution does help to see more. I'm not sure how VGA will look on a 40" but on my monitor it looks just fine, if not better than HD AV cables. I would think this is more-so dependent on your monitor/TV.