Optical cables should have less jitter and better sound charecteristics, but there is little difference. In terms of the above comment Coax doesnt require a TX and RX unit, the Toshiba TOTX173 and RX are the most common, they operate at 5V TTL, where as most receiver/ DSP chips are either 5V compatible. The Coax standard is 0.5V so a pulse transformer is used to change the voltage up. Bothe the TOTX173 and the transformer are less than $3. The 4 big things in sound quality are the source - some MP3 encoders destroy the sound whereas other preserve most of it, the speakers, the speaker cable - upgrade this first, and the power dac/ analog power amplifer.