The choice between using analog or digital outs often comes down to which component (your CD player or your receiver) has the better DACS. Personally, I like using the digital connection. I prefer coax anymore, simply because it's easier to connect (especially when fiddling behind an entertainment center) and the cables are often more robust (although there are some sturdy optical cables out these days). Optical or coax should give you the same performance, especially if you are doing normal cable lengths of under 10 feet (I arbitrarily picked that length because I don't know at what length there is a difference, if ever).
