Well, the bandwidth is the problem. Toslink has very low bandwidth (tens of MHz) while coax has high bandwidth (hundreds of MHz). Because of limited slew rate in Toslink system (receiver and transmitter) noise converts to jitter (because noise affects threshold). Many measurements showed Toslink having 2x worse jitter than coax. On the other hand non-expensive transports have slew rates in order of 25ns making it similar to Toslink. Fancy transport can swing in few ns but this requires expensive well impedance matched digital cables to avoid reflections on impedance boundaries. Whole thing is system dependent making it difficult to make any definitive statements. Often Toslink is a blessing since it breaks ground loops.
Coax vs. Toslink
For what it's worth, Ive discovered that an optical hookup provides better audio sound out of my cable box than does a coaxial connection. I prefer to run the HDMI direct to my TV for both cable and DVD and, while coax works better for CD/DVD, optical provides markedly cleaner, fuller, more detailed sound from Comcast music channels. Don't know why coax works better - don't really need to know - just thought I'd put out the word.