Optical Output for iTouch 4?

Does anyone know if acompany makes an iTouch4 cradle or cable that would accept a digital optical cable for audio? MP3's are digital, doesn't make much sense to use Analog cables from the iTouch to a digital sound system. [email protected]

Just saw this post.
I have the same complaint with iPad output. It's tough to get a straight answer from Apple about the quality of the output from the dock connector.
1. From what I can find, the headphone jack does not give real Line Out quality. It sounds pretty good through good headphones but not to run a good stereo set.
2. I have had difficulty finding out what quiality the "Line Out" signal is from the Apple dock for iPad/iPhone.
3. The HDMI connector from the iPad will support digital audio and should work well according Bang and Olafsen.
4. You can get OPTICAL output from the Airport Express but I'm not sure how to set it up as a hub WITHOUT needing a connection to the full internet. Anyway you can connect an iPad to a correctly set up Airport Express and play iTunes to it and then it feeds your stereo. This is about $100  but a cable connector (if it existed) would be on the order of $50 so this isn't too bad. I don't have the link on how to do it but I did see it. I'll try to post it.
Cheers!

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