Historically (meaning pre-computer audio days) TOSLINK was said to have more problems with jitter than SPDIF over coax, so most enthusiasts considered coax to be superior.
However, computers being a noisy environment from the standpoint of electrical noise...being that they are not designed to be audio components...TOSLINK might well be superior to a coax connection from a particularly noisy PC.
I've used an E-MU 0404USB quite happily over USB for 5 years now, but it was one of the first devices to use proprietary drivers and thus operate more or less as an outboard data storage unit. It takes in the data and reclocks it to the d/a section independently of timing on the USB connection, which is how the original USB Audio standard works.
The only problems I have run into are with my laptop when it's running on AC adapter. Laptop adapters use a switching power supply that can create a lot of electrical noise on the laptop power ground, which can transfer through the machine to the USB port ground...and if a USB DAC's analog output section ground is not effectively isolated from the USB input ground, there can be problems.
If I use the 0404USB's internal headamp, I don't ever have a noise problem. If I use a separate headamp connected to the line outputs of the 0404USB, I hear a variety of hiss, static, and "beeping-like" noise when the AC adapter is plugged into the laptop.
With a Musical Fidelity VDACii, I heard the noise all the time when the AC adapter was plugged into the laptop, no noise when disconnected as the only way to use it is with the analog outputs connected to the external headamp.
With an Audinst HUD-mx1, the results were the same as with the 0404USB...noise on an external headamp connected to the analog output jacks only when the AC adapter was connected to the laptop, but no noise when disconnected, and never any noise with headphones connected to the Audinst internal headamp jacks.
To me...all this means is that some USB DAC's are improperly designed, as it's clear the headphone outputs can be adequately isolated, and there's no reason the line outputs should suffer from noise problems.
Some laptops won't have noise issues and will work well with a variety of DAC's over USB. So all things considered, you have to use what works best in your own situation.
