Re: CD player vs. PS3
Patrick: to expand on Man-Fai's post, the digital-to-analog converter (DAC) in the Sony CD player might be of higher quality than the PS3's, so CDs would sound better.
But.....if the DAC in the Onkyo
receiver is of higher quality than either Sony machine, than a digital connection would yield the better sound.
On the extreme end of the spectrum, if you used this beautiful wood-trimmed
Yamaha CD-S2000 sacd/CD player - yours for only $1500 - than definitely use the Yamaha's analog output!
But wait, there's more! If the Onkyo converts the signals of all of its analog inputs to digital form, a common occurance with HT receivers (makes it easier to manipulate and route the signal through an HT receiver's maze of circuits) than part or all of a high quality external DAC's improvements could be negated.
Could be, because good DACs aren't that expensive anymore so any degradation by the Onkyo very probably is inaudible. Actually, any change in the sound would really come from the sound that Onkyo engineers chose for the circuitry used in the receiver (I do believe that while subtle, the sound of different receivers can vary - there are sooooooo many different circuit designs that handle music signals differently, in turn changing that signal ever so slightly).
To get around this, many HT receiver manufacturers have been including a feature that when activated creates a 100% analog path for certain (or all) analog inputs. The only possible disadvantage to them for some people is that they usually deactivate EQ/calibration systems, bass/treble controls, simulated surround systems or anything else relying on digital technology. Fluorescent front-panel displays are also usually shut off since those can create high-frequency signals that can leak into delicate analog circuitry.
To echo what the other guys said, try the various connection methods and see which one sounds best to you.
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BTW, another nice little feature most dvd players don't have: if you have one of those CDs that have a hidden track placed
before track #1 - for example, 311's
Transistor album - at least with my CD players, you can use the "<<" scan button to scan backwards from track #1 and "rewind" to the beginning of that hidden track.

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the title usually includes the word "pure" or "direct"