When I first set up my LinPVR, I ran analog audio. It sounded pretty good and I was happy.
I only found a few references to digital versus analog output from the PVR but there seemed to be some concensus that letting a high end AV receiver would improve the audio but it might not be noticeable.
Well, let me tell you, it's noticeable. It's plenty noticeable. Particularly with FLAC audio, the sound is absolutely sparkling.
Onboard analog audio from the A8N-VM CSM was actually pretty decent considering it's being driven by a couple of operational amplifiers that are probably worth well under a penny, when you consider how much noisy IC die space they take up. I could have lived with that sound quality but with the toslink going to a Denon 3806, I revel in it. Strangely, the biggest improvement isn't in the highs, it's in the bass.
I'm using Dennis Murphy designed mb01 speakers that are extremely revealing.
Other than that, I don't use any exotic cables or anything. My toslink cable is from walmart (why do people buy expensive toslink cables?) and my speaker cables are nice silicone jacket copper wires from Monster. As I recall, I paid about 40 bucks for a 100' roll at CostCo. No power regenerators, or anything of that sort either.
It's just PVR->(optical)->AV Receiver->Speakers.
FLAC audio files really do sound as good as a CD played on a high end transport, to my ear.
.... so if you're an average user that wants nice sound quality, go ahead and enjoy the analog onboard audio from your motherboard. It will sound good. If you're a bit of a snob and want the best sound possible, you will be pleasantly surprised by FLAC recordings streamed from your MiniMyth system to a decent quality AV Receiver.