For the better part of several years I haven't had any internal DVD/CD drive in the systems I mainly use; I've used a parallel IDE DVD+/-RW unit stuck into a 3rd party USB 2.0 high speed -> IDE 5.25" enclosure.
Except for having problems with one bad USB cable and one bad USB port on the front of a case, I've had really very few problems with this arrangement for reading, writing, booting, et. al. I can operate at the full speed capability of my DVD drive with this arrangement.
I've had one problem with a certain game in Vista which I think messes up my USB driver to the point where I need to reboot after I play it to get the USB DVD to work again. That's clearly a bug / brokenness in that particular software setup / game AFAICT.
Old computers with really old / bad BIOS versions may not have a BIOS option capability to boot from a USB CD/DVD, so that may be a problem if you're running anything from much before 2004 or so.
For LINUX / UNIX / XP / VISTA, though, for the most part, it just works as well as it would if it was not externally attached.
Oh, yeah, I had a really hard time updating the drive firmware once over the years because the brain damaged drive firmware update program didn't work over the USB link. I've only had to do that once; I ended up just hacking the update program to make it work I think. If you bought a DVD drive that was originally sold as a USB device you wouldn't have that problem since they would have to have their update program work over USB in that situation...
I would highly recommend an external unit. I think it is better to save the lifetime of the device and save power by turning it off when you are not using it. It is also a great savings of money to have one unit you can use with multiple PCs whenever necessary.
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