If you use analogue interconnect, you are using DVD player's surround processing. If we're talking 2 cables, left and right, DD or DTS will be downscaled to stereo. Some players/receiver combinations permit 5.1 analogue, but this is mainly aimed at high resolution audio (SACD or DVD-A).
With the digital interconnect, DVD is only acting as transport of digital signals. You are using receiver's surround processing, which in general is much better for Home Cinema. Coaxial or optical? Theoretically little difference, transfer protocol is the same, but on my equipment coaxial is clearly superior.
If you use the same gear for music as well, enters the Digital to Analogue conversion chips (DACs). Yet again, analogue interconnect means using DVD player's DACs, whilst digital means using receiver's DACs. In theory, you should employ the better set of DACs. But cable quality eventually stirrs this up. Anyway, experimenting is fun...
Cheers
FA