Gradient banding in Samsung 20 inch LCD

Question

Now idk where to begin, ok here's the best info i can give
I just assembled a new pc for graphic work/budget gaming 2 days ago:
intel core i3 530 mhz
2 gb ddr3 ram 1333 mhz
xfx nvidia geforce gt 240 1gb ddr5
windows 7 ultimate 32-bit
Samsung Myst Eco B2030 widescreen 20 inch lcd monitor
Now when i opened an old psd which contained some brushing and gradients, i could see bands in the gradients, even the wallpaper i put had bands on it. I even noticed that everything on my lcd looks hellish sharp, and when i force my head really close, i can see small square pixels all over the l cd. Is it due to the analogue output(VGA)?, should i switch to DVI?
I use 1600x900 res (native) at 32 bit
Then to test whether all gradients look the same, i opened a new ps document and made a black to white gradient, but it was smooth, there were no bands in there. But when i made a simple white box, applied full gaussian blur, and zoomed in around 2000% i could see the gradual bands again though not as bad as in the colored psd. It seems the problem only happens when i give a glow, or blurs. Then i played Splinter Cell Conviction (everything Maxed out) and again  i could see gradient bands forming up in dark places, like when i die and a small cutscene is played, i could see gradient bands on the 4 corners. What could be the problem, is it the card? the lcd? i am new to lcd monitors so i dont know how to calibrate or whatever.
Please check if anyone else can see the bands on their lcd?

Answer 1

Regarding calibrating your display, it's not strictly necessary, but you did mention "oversaturation" in a post above.  It's certainly your call whether you want to make your color-managed applications put out calibrated color.
Re switching to DVI, that's falling out of favor...  How are you currently cabled to your monitor?  HDMI?  VGA?  You've mentioned both.  DVI would CERTAINLY be better than VGA.
This "Coarse effect" you speak of...  Are you talking about jaggy fonts, or what?  If so, do you have Font Smoothing enabled?
When I first switched from CRTs to LCDs (in 2004) I marveled that most graphics created by people using CRTs were actually butt ugly, simply because they could not see the actual image content very clearly and tended to overlook things and overcompensate for their own monitors' shortcomings.
On a good LCD using a good interface (DVI or better) you can see every pixel as a discreet element.  That's a given.
After my switch from CRT to LCD I had to reset my perceptions - I had thoughts just like yours!  After a while you start to realize that what may look oversharp and harsh to you may even still be too subtle for CRT users.  For some time there's been a mix of CRTs and LCDs in the world, though honestly lately I've started to ignore the former as they are truly a dying breed (just try to buy a new CRT monitor nowadays).  It is not wrong to concentrate solely on making graphics look good on ultra sharp LCD monitors.  Don't be too hard on yourself for what you've produced in the past, when you couldn't "see clearly" yet. 
That said, I should note that there are some LCDs that are not sharp at all.  From time to time people post on this forum that they have trouble seeing the Photoshop UI elements at their fixed small size, and as you're no doubt aware now with your monitor there's really no problem seeing them on a very sharp display.
You could try taking a macro photo of what you're seeing on your display that you don't like.  Other than that it's very difficult to communicate about such issues on a forum.
-Noel