What cables to buy for best sound

I recently got a wireless LG home theater system for free from a family member who was going to trash it. It's only a year old but didn't play dvd's anymore and one of the speakers had stopped working. I replaced the cable for the one speaker and it was fine. As for dvd's I really don't need that feature. I just want the surround sound.

So with that said, the test came up with all the speakers working fine. But I don't get surround sound when playing it through my tv. I found this is because I am connecting to the receiver via component cables.
The connections on the back only allow me for optical or hdmi. Which of these should I choose? Is there an advantage to either?
And while I'm here, I can't seem to get my current hdmi cable to work between my tv and my ps3. It's worked twice, but now I can't get it to turn on. all devices are off, I turn the TV on first, then the ps3 (also tried in reverse order) but nothing. Any help there?