I only use optical if I have to. Everything I have read and heard suggests to me its signal transmission is moderately inferior to a good coax cable. This excerpt from the PWD manual says as much, and it is echoed by many:
In order of preference, from a high-performance standpoint, here are the recommendations for
connecting the PWD to your source equipment.
1. PS Audio Network Bridge. This optional slide in card connects your PWD to your home network.
2. I±S. (Pronounced “I squared S”) This is the next best performance option. This connection
method will only work with a similarly equipped I±S input using the HDMI connection.
This will not work into a standard HDMI connection and must go into a PS approved type
such as that found on the PerfectWave Transport. This input is capable of 192kHz 32 bit data.
3. USB. Universal Serial Bus. This is used when connecting a computer. The computer will
automatically recognize the PWD if it is a Mac. If you have a Windows computer you will need to
download and install the driver available through
www.psaudio.com This USB input is
capable of 192kHz 32 bit data.
http://updates.psaudio.com/MarkIIUSBDriver/USB-2.0Driver-V1.22.0.zip4. XLR. This is a balanced S/PDIF encoded input that complies with standards set by the
AES/EBU (Audio Engineering Society/European Broadcasting Union). This input is
capable of 192kHz 32 bit data.
5. RCA. Coaxial single ended S/PDIF encoded input. This input is capable of 192kHz 32 bit data.
6. Optical. TOSLINK optically connected S/PDIF encoded input. This input is capable of
96kHz 24 bit data.
Having said that, I am on no anti-optical crusade. I run the AppleTV on optical when HDMI is not an option, or when there is a reason to want to split the video and audio digital signals. Moreover, as is the case of the PWD, it is important to know whether any of your inputs have limitations on them. Here, one obvious reason for the ranking of the optical link is that it will not pass higher resolution than 96/24. For me, that would be a non-starter, as I have a lot of files above 96k.