Need this suggestion from a true audioholic. For better sound (including 5.1/6.1 or 7.1 channel surround sound), is it better to connect DVD player with a digital coaxial or digital optical? I want to connect my
1. Sony CD changer with my 7.1 channel A/V receiver.
2. My Blu Ray DVD player (with Dolby True HD and DTS HD) with my 7.1 channel A/V receiver.

Also, is there a benefit to using an equalizer between my CD player and A/V receiver or is it better to just play my CDs flat. One down side of using an equalizer is that it wont give me a digital output.

It doesn't matter, as far as CDs or DVDs go.

For Blu Ray, I believe you'll either need to use HDMI in order to get TrueHD and DTS HD.

There is no difference between the quality of optical and digital. The optical cable is a bit more fragile--doesn't handle twisting or severe bends quite as easy, but it's not susceptible to any interference from other wires or components. I use both types of connections and can't tell a difference.

I prefer digital because it's less problematic. One time I unhooked one end of an optical cable and let it rest on the dusty shelf--the lens got dirty and wouldn't transmit sound after that. Now, I always hang on to those little plastic caps.

Hooking your CD player up to your receiver via optical/digital will utilize the DAC in your receiver.

As far as your Blu-ray, I'm not sure if it will pass a Dolby True HD or DTS HD signal via optical or digital. From what I understand you must have an HDMI or analog connection. Hopefully someone with a Blu-ray player can chime in.

For multichannel PCM (uncompressed) or any of the high def audio (TrueHD, Master Audio etc) you need to use HDMI or Analog Out (if you're player has them).

Optical/Digital Coax does not have the sufficient bandwidth to carry the high def audio signals.