I have no problem with optical-scan ballots, and they may well be more cost-effective. For that matter, I like the punch card system which my county (Ventura, CA) uses. The voter actually punches out the holes with a positive-action lever machine; there are no perforated ballots or hanging chads, and the system is reliable and accurate.
I have no technical objection to touch-screen video terminals, just so long as there is a verifiable paper trail. Without that, they're shit.
As to what advantages a video terminal system might have over optical scan, there are some potential advantages if the right system was used. For example, see David Chaum's proposal for Secret-Ballot Receipts and Transparent Integrity.
I'd independently invented the idea of a transparency one-time-pad, though I used two-pixel blocks instead of four-pixel ones. Interesting application, but I don't quite understand what it really buys. One of the requirements of a good voting system is that it be possible after-the-fact for anyone to prove how a voter voted--even the voter himself. I didn't see how the receipt could proof that a vote was counted without providing proof of how it was cast.