Will an hdmi make a picture quality difference on my tv?

I have a 46 inch samsung with 1080p and 120 hz resolution, and a sony home theate system. I want to replace the yellow rca jack, its the standard type, but I want to replace the yellow video with an hdmi cable, will the hdmi make a difference in picture quality? Im only replacing the yellow rca because theres no red and white rca, its a surround theater system, and the dvd receiver is NOT blu ray. Also, will I still get surround sound, or only 2 chanell, i heard from a associate id only get 2 chanel