Is optical better than regular red and white rca?
Optical has the ability to carry Dolby/DTS encoded surround sound (up to 6.1 discrete channels, lossy compressed) over a single cable and is less susceptible to interference than analog connections for longer runs. However, if you are only listening in stereo and your source device(s) are capable of decoding all of the necessary codecs and outputting the audio as stereo analog then those advantages are irrelevant. If you were planning to use a significant amount of DSP in the receiver then it might still be better to run optical as that would avoid adding an unnecessary A/D and D/A conversion.
Does your new AVR have 5.1 channel analog inputs and does your Blu-Ray player have 5.1 channel analog pre-outs? If the answer to both is yes and you intend to connect a full 5.1 set of speakers (left, right, center, left surround, right surround, and subwoofer) then I would actually suggest connecting those using 6 RCA analog cables. This way, assuming your Blu-Ray player can decode Dolby TrueHD and DTS-HD Master Audio and output as multichannel analog, you get the full benefit of lossless surround sound audio, rather than the lossy variety supported by optical/coaxial digital connections.