I think that IEC958 = digital output. I don't use S/PDIF / optical out, but 
normal analog 3 x 3,5mm jack outs.
I can't imagine why some things works fine before distro update, and fails 
after. With strictly the same config. I ALWAYS have problems with PulseAudio, 
when new ubuntu released, but I don't know what might be good alternative, 
something what works with surround sound.

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SB Live! USB / Toshiba Multimedia Center 5.1 recognized as 4.0 / Karmic
https://bugs.launchpad.net/bugs/466394
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