I just wanted to check here which way will I get the most out of my Onkyo 605 and Blu Ray player if I connect the HDMI audio with the PS3 or the BDPS300 thanks.
A big hell no on the BDP-S300. It doesn't bitstream or internally decode. PCM appears to be going away in Blu-Ray releases.
The PS3 will internally decode Dolby TrueHD and likely DTS-MA in the near future.
The LG BH200, Panasonic BD-A(K)10 and Sharp units will internally decode Dolby TrueHD or bitstream high res audio allowing your Onkyo to decode DTS-MA (or Dolby TrueHD if you prefer).
My choices are between PS3 or Sony BDP S300
Absolutely 100% incorrect. The BD10 and Sharp do not bitstream. They will only internally decode TrueHD.