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Does it also mean that I will have to upgrade my VCR to accept the higher quality HDTV signals if I want to enjoy the benefits of HDTV quality on my recordings?
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Yes except it won't be video based. As far as I am aware the only way of recording HD programming is either using a HD PVR (i.e. Telewest's TV Drive or Sky+ HD) or something like a Blu-Ray or HD-DVD recorder (both very expesive and I don't believe will be generally available for some time. Copyright restrictions will probably mean that recording HD on an external device will be a bit problematic anyway.