Just a brief comment -
I agree with the commenter above that the difference between Hardware and Software Plug-ins is narrowing in most applications.
The one thing Software and Digital Emulation still had not come close enough yet to be convincing is TUBE emulations.
Simple example -- guitar players out there will tell you this also ---- though they are useable and can create interesting sounds, none of the guitar amp emulators out there feel, respond or sound like an authentic tube amp on 10 being miked in a room.
Amplitube, POD, Vandal, etc...etc..etc..
There is still something not right about them.
It is kind of like comparing a 35mm print to a Polaroid.
The digital emulations seem to capture the basic image, but lack the complexity and depth of tones, etc..
Kind of like the way most Analog Tape plug-ins are good at emulating the bass head bumps, EQ roll offs below 40 and above 16K, the broad mild tape saturation "warming" between 300-400 HZ, etc..
But they usually lack the Wow and Flutter factor which makes tape sound more "alive".
The W&F causes random subtle shifting in the music that help blend tracks better and gives it more depth.
Digital is almost too perfect, direct, and sterile in that regard.
But honestly, all of this is technical nitpicking.
Heck, the average non-musician listener can't tell a drum machine from a live drummer and we who do recording argue over which is better ------BFD-Vs-Supreme.
Even most of us could probably not listen to a finished album and comment ------ Oh yes, I can hear he used the UAD 1176 plug-in on that song and not the actual hardware unit.
On the other hand, you can often listen to a commercial or song and recognize the POD or Amplitube sound for guitars.
So for my 2 cents worth , to summarize ---
I think the difference in signal processing software and hardware as narrowed in most cases (like those above said too)
But in some areas, there is still a weakness in the digital imitation of some instruments to play and create the musical tones that comprise your song.
Makes sense if you think about it .....
It is one thing to use a signal processor to tweak a recorded sound.
It is something altogether to artificially create and imitate that recorded sound.
We may not be able to hear the difference between a UAD Plug In -OR- actual 1176 slightly processing a guitar tone.
But we can hear if that guitar tone itself was not authentic.
It takes a whole lot more computer "smarts" to perform the latter magic.
The recorded sound IS THE SOUND.
The tweaking with EQ, compressor, may only be 5% of the sound.