Let's be honest here -- the picture quality using the component cables is crap. A tiny little image in the middle of your tv. Unless your tv has a zoom feature, it's painful. Even if you do have zoom, the image just rapes your eyes because it's so, so bad.
Hell I didn't even know a composite/RCA cable was made for the PSP, hah!
I have the component one and I will say that it really is a sweet little thing to get if you can nail down one for $10 or less as it's a tad overpriced normally.
The only hang up with it is that PSP native games from a UMD will run in a box like 80-85% of the size of your tv viewing area. Beyond that PSN games, PSOne games, UMD movies, movies you shove on a mem stick, pictures and the rest, even the menu all run full 100% size on the screen.
I've used the cable for a few games here and there and also to watch a few UMDs I have grabbed over time or got from some package. The cable is pretty solid. Unless the game looks kinda bad on the small screen, blowing it up on your TV doesn't look any worse and at itmes depending what you're working on it helps having more view area to play with. Something with small visuals like Sim City 2000 PSOne, or something where you need more precision say like a Gran Turismo or some flight game that really is a nice option to have too. When the visuals get blown up they pretty well end up like watching a mid-life PS2 title, rarely something a bit nicer such as God of War or Gran Turismo which shape up fairly nice against their console big bros.
I never did bother for some reason trying the zoom feature on my tv but I wouldn't doubt for a second you could use it to get back up to or near full screen. Either way on my 26" Panasonic LCD stuff looks tight and I love the audio being ramped into my 5.1 system too as a bonus.
Trust me take it. The fact that the 2D stuff scales smooth and the 3D stuff tends to have more than enough polygons even blown up to look mid-era PS2 quality at best is no reason at all not to get the jack even with the loss of 20% of the view area on the UMD PSP releases.
The only limitation is the quality of the game, movie, etc. Pirates of the Caribbean on the UMD has some artifacts with squares in places here and there when busy and more noticed blown up, but then stuff like Crouching Tiger looks smooth as hell on there. Games basically seem to fall into the same realm with their videos or when someone does some halfass job with some polygon texture as it's easier to notice, but in most cases stuff just is pretty and bigger.