You might have gotten an overly bright sample as every LCD's backlight is a little different, but pretty much all LCDs are fairly bright. Although at the same time, that particular model's brightness is not rated all that high, so I don't know. If you have turned the brightness to minimum, there isn't a whole lot else you can do aside from exchanging it for a different sample.
I also find LCDs hard on the eyes for text, especially in the dark, due to their excessive brightness. The brightness is great for games (although it comes with a huge tradeoff in contrast on LCDs), but it sucks for general Windows usage. I get the best of both worlds with my monitor though.

DVI will always be better or the same as VGA on an LCD, so you might as well stick with that.
As for the banding, it's probably a bit of both. If you were on a shadow mask CRT before, the higher brightness and lower contrast probably makes those things stand out more while consumer LCDs have a bit of inherent banding anyway, even 8-bit ones.
8ms doesn't necessarily guarantee no streaking; I can easily some motion blur on 8ms overdrive screens. It depends on how sensitive your eyes are.