Some insight for you on this topic: The component cable is only for video purposes. Much like the S-Video cable (good picture) and the HDMI cable (best picture). So this will only get you the picture. Component is better than S-video.
To receive 5.1, 6.1 or 7.1 surround sound, you'll need a Digital audio cable, which can be optical or coaxial. Run that from your PS3 "Audio Out" terminal to the "Digital Audio In" of your home theater receiver. You might then have to tell the receiver to assign that input to match with the PS3.
Without the Digital audio cable, you'll only get analog audio if you use a standard RCA-type audio cable.
Back to the video portion for a minute. I do believe you need to be consistent with your video cable connections from equipment to equipment. Ex: You use a component video cable to connect the PS3 to the receiver. Then to transfer that video, sustaining the quality picture, you'll need to connect another component video cable from your receiver to your TV. Don't think you can mix and match.
Just go with the best cable that your TV supports. If your TV has HDMI inputs, as well as your receiver, then truly go this route for cable connection.
Most of what Sidney said was true, except that if your receiver is capable of decoding HDMI audio, you should be able to just connect an HDMI cable to the receiver HDMI in, and then connect from the receiver HDMI out to the TV for the picture. The receiver will get the 5.1 surround off the HDMI. But if your receiver is a pass-through type and does not decode HDMI audio, then you will need an optical or coxial digital audio cable for 5.1.
In response to Syndey D Evans, respectfully, I differ with regard to your sweeping statement that HDMI is "best picture". Quality component video cable can deliver superior signals from a Blu-Ray player to a HD TV. It can urpass HDMI for image detail and color accuracy. You can not say in advance that HDMI or Component is better (quote credit article below).
In my blind A/B tests I have either had no preference or favored HD. On the no preference, it was to a rear projection 720p TV. On 1080p LED, component is better every time I've tested. Please try this for yourself. Great read/info here: