I did a bit of both: Transferred my cassettes to MP3 and put them in my collection - as some of them dated from the mid 60's and my tastes have changed somewhat, those I found that I still liked, I subsequently purchased the CD/downloads, it's extraordinary the price of some of these Amazon deals.
With vinyl L.P.s, I found that I could get a highly acceptable quality (Partly because from the mid 70's each time I purchased an LP, I immediately put it on a chrome cassette). On the odd tracks which jumped or had a click, I just replaced the one track with a downloaded one.
I used software called Audiotools which very capably did the track splits. Unfortunately because he was so fed up with being pirated and generally ripped of, the author has withdrawn it.