Just noticed this thread has been running since the beginning of '06, really shows how this topic of analogue versus digital is such a biggy, but unnecessarily so. I have only read the last page of comments, but what stuck out was the comment by Engelgrafik that "everything that distorts in digital is like nails scratching a chalkboard", and the answer is as simple and as complex as that -- distortion is distortion is distortion.
It is relative easy to get analogue to sound "good" because the heart of it is a mechanical process; digital's heart is very complex electronics, and so the task of eliminating "nasty" distortion is much, much harder. You have to work at it and work at it, but the end result will be worth it.
My experience is that digital "done right" in a match race with analogue will most definitely be the winner, and by this I mean experiencing the "soul of music" will be able to be fully realised! But, and a big BUT, if one tiny, tiny thing is not working correctly in the digital setup then it can crash and burn, big time!
An analogy is a performance vehicle versus a comfortable, sloppy springed family sedan. The latter will always be pleasant to drive even if out of tune, but the former will be a monster, and you will hate it if something is not working right. But get it right ... then you'll prefer the performance vehicle.
A key indicator of digital working well is that there is no such thing as a bad recording, you can enjoy the "soul" of everything you have ...
Frank