I must somewhat disagree with Ignacio Vazquez-Abrams. Since no DAC is mentioned in the question, I'll assume that there isn't any.
In that case, backward compatibility of DVI is used (there's the DVI-A mode). Some (I'd say most) DVI connectors can send analog signal through the cable to work with analog receivers. Then the signal goes through the DVI->VGA converter that is just a mechanical converter which provides a VGA plug at the end of the line and the signal is actually analog the whole way.
In that case, I'd say that the difference would mostly be in the type of particular cable used and in forward compatibility needed at the end of the cable.
The DVI cable itself may be better than a VGA cable, but there's no guarantee of that. On the other hand, if you plan to switch to digital later on, than DVI may be better option.
Also be sure to check if the source can provide analog signal through the DVI port. If it doesn't, then you'd need an active converter, which can cost a lot more than passive, but you'd have digital signal up to the point at which the DVI cable ends.
What resolution displays are you looking at? What refresh rate? DVI-D should cope well with WUGXA (1920x1200@60Hz) up to 15ft, further with a lower resolution, whereas analogue cables can show significant ghosting with even 1024x768 at that distance, even with good quality cables. – Mark Booth – 2011-09-05T10:27:27.333
Also as suggested in the answers, are you talking about a passive DVI-A/DVI-I to VGA converter like this, or an active DVI-D to VGA converter like this?
– Mark Booth – 2011-09-05T10:40:28.560I've updated my answer to be more clear, thanks. – Josh M. – 2011-09-05T16:34:11.077
Any particular reason why you are sending a 1024x768 signal to an 800x480 device? You would probaly get a much better quality display if you scaled your application to the screen rather than relying on the screens internal re-scaling. – Mark Booth – 2011-09-05T17:20:57.653
The display is listed as "High Resolution Display 800x480 up to 1024 x 768." And 800x480 is not a "normal" resolution so it doesn't show up as an option unless you use a 3rd party app to add it as a value. I'd rather just go the easy route - the display supports it and it looks good. Thanks. – Josh M. – 2011-09-05T18:09:25.803