For the best picture, use a good quality SCART cable, and in the video menu of the Sky+ select RGB as the output format.
You may have to select RGB in on your TV's input preferences as well, or it may default to bog standard composite instead.
Going RGB will always give you much better picture quality than SVHS.
You can then get Dolby 5.1 audio by using a coax cable direct to your Yammy.
In this way, you can still get ordinary stereo through your TV set via the SCART connection, then turn on the Yammy to get improved audio or surround sound when available.