This actually opens up a whole new can of worms.
Not all soundcards are equal, not all s/pdif is equal. The sound cards most definitely color the sound and it's not as simple as taking a wav file and just sending the same (amongst different sound cards) digital data over the S/PDIF. Analog output from a sound card is usually really bad since PC's in general have very bad shielding.
The next issue is the DAC. This is what converts the digital audio into analog (drivers are analog so there has to be a DAC somewhere in the pathway). Not all DAC's are equal. If you look at the different squeezebox offerings, their highest end box (Transporter $1999) claims to have a high quality DAC (AKM AK4396 Multi-bit delta-sigma digital to analog converter). Can you really hear a difference? I don't know. My guess is the differences are subtle and it will depend on the type of music you are listening to. If you pop over to
www.head-fi.org you will find people that claim to hear differences with cotton shielded silver wire. . . and further differences after the wire has been broken in.
The next question is what quality audio files are you listening to? If you are going to be playing mp3's that are encoded with anything less than lame -V 0 (256 vbr) then S/PDIF is probably good enough. With audiophile grade speakers however, you really should be using FLAC,APE or WAV. The Yamaha only supports mp3 and WAV, however the squeezebox does support FLAC.
I'm pretty much in the same boat as you. I have most of my collection ripped to FLAC and APE. So do I go for the Yamaha RX-V2700 and play mp3's or WAV, the $249 Squeezebox or perhaps get the $1999 transporter.
