I'd say that was likely. And why buy a $2,000 HDTV and get little if any HD use out of it when maybe $200 more might get the full HD signal? I think after 2/1, or maybe now, you might get a deal where you pay $200, but get $200 in programming credits, and get a ViP622. Someone more knowledgeable than I might help you here. Call a CSR and see what they say. You'll pay an additional $20 per month for HD. I don't think you'll have any other additional amount to pay, assuming you swap the 625 out.
Besides, I'm pretty sure S-video doesn't pass 480p, just 480i. It certainly doesn't pass any higher resolution.
SD from satellite is normally MPEG-2, but will slowly move to MPEG-4 (which the 625 does not support). SD is 480 lines out of a 525 signal. Digitally, you might actually get 400 to 480 viewable lines. I think OTA analog you get 350-400, and VHS as low as 200. Other factors vary these numbers somewhat. If you want HD, you need an HD signal and an HDTV. You won't magically get SD looking better on an HDTV- there isn't any extra picture info thrown away by the 625 or analog TVs.