We develop a theory of modulational instability of multiparameter solitary waves and analyze the transverse instability of composite (or vector) optical solitons in a saturable nonlinear medium. We demonstrate theoretically and experimentally that a soliton stripe breaks up into an array of ( 2+1)-dimensional dipole-mode vector solitons, thus confirming the robust nature of those solitons as fundamental composite structures of incoherently coupled fields.