do you really need to convert component to HDMI? You don't have any component inputs on the TV?
First of all, at this budget, you aren't going to achieve any great level of video improvement with a receiver. Then, nothing beats direct connections. And with direct connections, you can calibrate every input individually.
Anyways, I don't know how well the Sony or Yamaha will cleanly convert to HDMI. I know I wouldn't care to use it though. And it seems funny to me that this is the most important aspect you are looking for in a 7.1 receiver.
I think the Onkyo doesn't do a very great job, IIRC, at conversion.
The one thing people enjoy about the Yammy over the Onkyo is the pre-outs so that you can add an outboard amp. For some, this is the most important feature.
The Sony cannot handle TrueHD or DTS-MA bitstreams. If your BD player is a PS3, then you are fine as that player will never be able to bitstream anyhow. The Sony will handle PCM over HDMI.
My vote is the Yamaha.
I'm trying to decide between 3 receivers....My surround sound setup is 5.1 mirage nanosat speaker system and I'll have cable with HDTV mostly using the surround sound for movies and television, but occassionally listening to music. I mainly want a new receiver that will be able to input my component video to HDMI and input HDMI and output HDMI. I've narrowed it down to 3 choices and would like input on those or other choices that I might not have considered...
1. Onkyo tx-sr605--highly rated on this site, cheaper at about 370 or less
2. Yamaha rx-v663--not rated yet, have an older yamaha and loved it over my even older sony receiver
3. sony strdg910--mainly b/c it has all the hdmi upconverting I wanted but am not sure I'm as impressed with sony's receivers....
thanks for all your thoughts in advance...