Uh, if you haven't wired up a Wii to see the difference you shouldn't comment lol. The Wii outputs 480P over VGA so it would look miles better than composite, not to mention composite will look like a "smear" filter has been applied over top of the image.
Anyways, don't use this panel. It's got a 18-bit color depth so not all of the colors from a Wii would display correctly and may look washed out. There's a new panel that was just recently released that's IPS, 3.5" and has a 24-bit color depth so it would work much better with the Wii. I'm not sure off of the top of my head what the model number is, but if you see that other model number (PD035VX1) stay away, especially for that price.