What's the normal connection from hd cable box for audio? Does that need an optical connection on the receiver as well? I just wonder if the receiver could support everything. My setup currently is the 3 system, the tv, the hd cable box and a dvd player. I do know the LG I looked at doesn't have any component inputs.
Oh, yeah if you have an HD Cable box and another DVD player in the mix then you need to keep at least the component switchbox.
HD Cable usually uses optical audio, though some boxes may do digital coaxial (usually color coded orange). However, you can hook your PS2 up via analog (red/white) if necessary without losing much so for digital hookups you'll need:
1) DVD Player
2) HD Cable Box
4) PS2 (optional)
Most receivers will support some combination of digital optical and coaxial jacks, though they usually have more optical than coax. Check your DVD player to see what kind of digital connections it supports- many of them support both.
Quality-wise there really isn't a difference between getting your digital audio via optical or coaxial.
First thing to do, then, is to look on the back of all of your components and see which digital audio outputs they support and add up your requirements. Use this image as a reference:
Total up how many optical outputs you have and how many coaxial outputs you have and make sure that whatever receiver you look at meets at least those minimums.