DTS uses a completely different algorithm and much higher bit rates than AC3 does. DTS is usually louder than AC3 and studies have shown that all things being equal, most people will perceive a louder sound as being higher quality than the exact same sound at a lower volume. Both are lossy. DTS does some high frequency roll off to save space that I don't think AC3 does. Basically, most adults start to lose their ability to hear high frequency sounds, so DTS just throws away any sound above a certain threshold because most adults won't hear it anyway.

AC3 takes up much less space, but DTS is perceived by most to be higher quality. edDV is completely correct. Many people with DVD players can't decode DTS at all. Most players don't contain a chip capable of decoding it because that adds to the cost of the player, so that pushes the decoding to the amplifier, if the person even has one. I know plenty of people with DVD players who don't own amps. Basically any DVD player that costs less than $100 US probably won't be able to decode DTS in the player and will have to send the signal to an amp for decoding. For greatest compatibility with other people, you have to use AC3 because it is an absolute requirement that ALL DVD players sold everywhere in the world must be capable of decoding the AC3 track within the player itself.

DTS already won the HD war.  All the major studios use DTS-HD now.

Thanks for replying.
Seems that DTS is the way to go! forgive my layman. I'm just getting around with these audio codecs; Last time i checked out there was the HD-DVD vs Blu-ray battle.
As for Brazil, it's too slow/weak system in order to have a say in these technological matters. So we just follow (as always) whatever comes from US/EU. Brazil doesn't invent, it copies.