http://doc.php.net/php/dochowto/chapter-skeletons.php shows the use of <parameter> in the <variablelist> that contains the parameter descriptions, so I have been using <parameter> whenever I have referred to a parameter somewhere else in the doc page. <parameter> is more specific than <literal>, and I always prefer to be explicit where possible -- but I'm willing to be corrected by some of the php-doc folks that have been around a lot longer than me.
I agree.
http://www.docbook.org/tdg/en/html/parameter.html shows that <parameter> can be used (almost) anywhere (within a <para> is ok, for example).
And, IMO, it's _always_ best to be explicit -- this will allow us to do things like show a popup of the type on mouse-over, if available. Literal is just that: generic, literal text.
S