Coax is better. I'm not an engineer and I'm not going to pretend so I can't back my answer up technically. If you were doing a ridiculously long run of cable, then optical might actually be better, but Coax is better.
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Coax is superior, if only because you don't have to convert an electrical signal to light and back. Many claim superior sound but I've never used Toslink so I cannot comment. Also, try to audition a nice high-end digital cable. I have the Illuminations D60 and was pleasantly surprised by how much of an upgrade it was for the price.