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In order to listen to DVD-Audio or SACD, you must use the 5.1 analog outputs of the player. This is due to the recording industry's concerns regarding providing high resolution music via a digital connection.
For standard Dolby Digital or DTS decoding, it is usually preferrable to use a digital connection and the decoders built into your receiver. Receivers generally have better bass management, speaker distance and level calibrations. Plus, I believe your Denon receiver is THX certified, and you will only be able to use the THX post-processing for DD and DTS via the receiver's decoders (and, hence, a digital connection).
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