HDMI/DVI adapter problem?

I've had the 1st gen Apple TV since it came out and have loved it. It has worked fine on my 5 year old Sony HDTV. Since this tv does not have HDMI inputs (has an DVI input), i used an HDMI/DVI adapter and this worked fine up till now.

Yesterday i got the new apple TV and tried hooking it up to my tv. But the picture was displayed in 4:3, low resolution (looked to be 480i), and was a little "wavy".

Is the problem that my TV is not compatible with the new apple TV?
Or i was thinking that maybe i need to get a new HDMI/DVI adapter. the one i have is a few years old. are the newer adapters on the market have new/better technology?

thanks for anyones help. i really don't want to have to replace my tv or return my new apple tv