I do CD. Rip 'em and do computer as source. Computer as source is so convenient for organizing the collection and making it easy to pick what to play.
I'll do digital downloads for things like eTree.
I'm very reluctant to pay for for digital downloads cause I get nothing in return (no right to resell or even give away) and I can't purchase any digital downloads used like I can with CDs (I buy many of my CDs used). It will be a very sad day when the only way to buy music will be digital downloads and the used CD/vinyl stores are gone. I like having a physical media that I can sell, trade, and collect. It's somewhat fulfilling to be able to look at a physical item and say that's what I spent my money on. It's not quite so fulfilling to look at $8000+ in sunk costs spent on digital downloads and all you have to show for it is bits on a hard drive. With CDs and vinyl you've got something physical and you can sell, trade, lend, give away, collect, and some even appreciate in value.