1080p lcd tv as computer monitor issues

I just got an Insignia 37-inch LCD TV 1080p to replace my 32-inch Dynex 720p TV, and I got a HDMI cable to use instead of VGA because I was told that I can't recieve 1080p through VGA, and when its plugged up through the HDMI cable, the colors and words are not clear at all, it's actually kind of smudgy, but whenever I plug ir up through my VGA, it's crystal clear but it's no where near as colorful and such.

My graphics card is an ATI Radeon HD 5570 if that says anything. I have Windows 7 Direct X 11 also. Any help would be appreciated.
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