Computer output to DAC, which route?


I have disbanded my main system because I am using my computer system more and more. I am going to purchase an outboard DAC for my computer, but I want to know something:
My computer comes equipped with COAX and TOSLINK outputs on the motherboard. Should I use one of those or use a DAC with a USB connection? WHat are the pluses and minuses of each way if any? I am using typical Altec Lansing speakers (good for what they are) but will probably move up to active Dynaudio monitors in the future. All music is sourced from itunes in either AAC or apple lossless formats.

Thanks in advance!
phoenix469
Thesauce - USB 1.1 supports streaming audio, but most USB 1.1 interface chips (in the computer) will probably create more latency than USB 2.0 chips, so eliminating pops and ticks may be more difficult with USB 1.1.

Steve N.
Empirical Audio
Ok, going to place the question here. MacMini has no outputs except the mini RCA jacks it looks like. Have not bought one was thinking this might be one way to go. Was thinking of using a Mac Mini with itunes. But will I get decent sound out of the Mac/
Inwanw - why not use the USB outputs for audio? With a converter or USB DAC based on the TAS1020 the sound quality can be excellent.

Steve N.
Empirical Audio
Audioengr, thank you, I think that I am seeing how this comes together. Now just have to put a few more dimes aside to put the package together. Going to have more questions as I put this together.
Check out the Soundblaster lineup of outboard soundcards/DACs. They connect to the the PC by USB, most with USB 1.1 and do not require Asio driver. They do stereo, 5.1 and some do 7.1. 24 bit/92 Hz DACs. S/N ratios over 100 dB (cause its outside the internal crap from the PC). List prices range from $50 to over $200. www.soundblaster.com.

I am using the Soundblaster Live!, RCA analog connects into Sherwood 100w x 6.1 receiver, B & W LM1 desk top speakers and small Velodyne sub. I listen mostly to the online radio stations while working on my PC. The nearfield stereo sound is awesome. Almost like headphones.