Do I need an optical cable or is an AV cable good enough?
It depends on your system and what kind of audio you want to hear. The optical connection will allow you to play Dolby Digital and Dts surround soundtracks whereas the standard red/white audio connections will not. The HDMI connection on the PS3 will allow all soundtracks including the newer Dolby True HD and Dts HD Master audio found on bluray movies. Keep in mind that HDMI carries video and audio. I’m a little confused on the HDMI situation. In the first paragraph you indicate that you’re going to connect your PS3 to your DVD box via HDMI, but in the last paragraph you say your DVD box doesn’t have an HDMI port. If it does, ideally you want to use HDMI connections for everything you can, that way you don’t have any limitations on video or audio.