usb vs toslink?

Big difference...not sure of all the technical issues involved but it's NOT like the old Optical vs. coax argument.... I am using an IMAC and was very disappointed in the Optical output quality. The USB into a good USB DAC is absolutely the way to go. Further, With the IMAC at least, Your use of the Optical adapter/Headphone port mutes the speaker output on the computer...you may want to hear other things/on other sessions without having to disconnect the Optical cable. There are several great USB Dacs available...including the Wavelength and the PS Audio Digilink 3... with apple lossless, the quality is, in my opinion, outstanding.

Just to be clear about your terms which I hope will help your research.

TOSLINK was developed by Toshiba back in the 70s. It is their equivalent to SPDIF which guess what was developed by Sony. Neither of these formats was ever envisioned as anything more then a test protocol. Lots of interesting stuff on Wikipedia.

TOSLINK and SPDIF are both very sensitive to the quality of execution. Most posters on these boards seem happy with their AE mini-TOSLINK but it is nowhere near optimal.

CAT5 cabling is used with Ethernet. Chris Venhaus and others developed cable recipes based on CAT5 for use primarily as speaker cables but no one uses CAT5 in conjunction with USB.

To connect a computer via USB one uses a USB cable - the Belkin USB Gold is most peoples choice. Or the Opticis fiber USB if you need a run over 15'.

There is also the option to run USB to something like the Hagerman or Blue Circle USB converter which lets you output AES, SPDIF or TOSLINK the"last meter" to your DAC.

Now of course comes the tricky part. For people who already have a DAC that a) they are really happy with and b) use with other gear; the USB to Hagerman routine with a premium cable on to the DAC is the path of least resistance and has made a lot of people happy.

If you don't have a DAC, then the recommendation is to use a USB DAC such as the Wavelength, Benchmark, Apogee, Paradisea or any (increasing) number of others.

The gold standard is a DAC that is designed to take the signal from USB directly to I2S completely skipping a SPDIF implementation.

i have a trivista DAC. or my krell 20i also accept digital input ( coaxial or toslink ), i am fairly happy with the sound of krell, or trivista, so my question is that if i get a hagerman and connect to either dac, would I expect a margiinal or noticeable improvement vs, apple AE to either DAC.
i have try apple AE , it's ok for background music, but not for serious listening

Toslink now comes in two flavors:

1) Plastic
2) Glass

The glass is a quantum leap in fidelity improvement over the plastic. van den Hul Octocoupler is probably the best glass Toslink out there!