My understanding (and I'm not authoritative here) is that digital is designed to be.. well.. 'crisp', but that the data is essentially all or nothing. With a CD for example, a scratch on the media will prevent certain blocks of audio or data from being read. It's all or nothing, you either read the block or you don't. Same seems to happen with digital cell phones too, you either receive the signal or you don't (as compared to cellular where bad reception causes static, not the 'dropping-out' effect). In this way, I imagine digital audio would be the same. Any 'scratch' or other inhibitor on the transfer medium will cause a 'drop-out' of a certain portion of the audio stream. Just speculation on my part though (although I stand behind my statements about optical media and cellphones).
Certainly I will admit: I have no idea why you need to pay $100+ for an audio cable. However, I believe the possibility that some may be able to hear differences more than others. To a beginning guitarist, the difference in sound between a hundred dollar starter guitar and a several thousand dollar hand made instrument may be virtually non-existent, but the difference to an experienced or trained individual will be well pronounced.