Before I got my new reciever this summer with HDMI, I connected my blu-ray player using the optical digital audio connection. Sounded great to me. When I went from the lossy codecs over optical (e.g. Dolby Digital, DTS) to the lossless codecs over HDMI (e.g. Dolby TrueHD), I didn't notice any huge difference.
So, my vote is for the optical connection.