This is what I've picked up from reading about the technical aspects, but corrections are welcome. It is probably true that USB was not designed with audio in mind, and to produce a jitter free signal with a precise time base. But it is not so that if you play at 44.1 kHz that the USB is expected to send 16 bits of data at exactly this frequency. But this is irrelevant since the usb speed is a couple of orders of magnitude higher than required for audio, and the stream is buffered. A proper DAC in a USB sound card should read the data from the USB stream buffer and use its own clock to create a jitter free (upsampled) signal that it then converts to analog. Obviously, if the data run out because the computer is occupied you will get a very noticible dropout. This should normally not happen, because the USB feed has a very high priority in the PC system architecture. However, poorly written other drivers may lock up the computer for many milliseconds - this can be tested (see my other thread). USB sharing also might cause a problem, especially with a hub with several connections, and an agressive other device connected to the same hub. My conclusion: jitter is not a problem with proper (external) HQ components, dropouts neither if the system is configured / fine tuned adequately. Whether co-ax is still better I do not know, I am not sure if the external DAC reclocks the signal from optical or coax digital sources. If so, I see no fundamental difference between USB and S/PDIF. If not the quality of the sound card's digital out circuitry (with/without jitter) might determine the result, and potentially the digital way could even be worse that the better buffered USB stream. BTW, setting up a PC with the proper USB ASIO drivers is much more hassle than just plugging the digital signal of a sound card into the DAC.
Now for a personal test: I have no experience with digital (laptop does not have S/PDIF) , only via USB, but it works great. Very difficult to my ears to hear a significant difference between source (24/192 DAC in CD player Philips SA963) and FLAC (24/192 in external V-DAC) in a ABX setup.
Pete10