I can only say that when I replaced my 32-inch analog TV with a 37-inch Sony widescreen HDTV, that it was a perfect match,as the picture was the exact same height.
So, your choice from 27 to 32 sounds like it might be good. i would go a retail store and measure the HEIGHT of the picture of a 32-inch widescreen compared to your 27-inch analog.
The TV has 4 options for input from devices. These are:
2 HDMI Inputs,1 Component, 1 composite and a PC 15 Pin Input . The component and Composite share a port, so it is an either/or situation, not both. If your VHS has any of these as output you should be able to Play your VHS and DVDs. There are no output ports on the TV, so I dont see how you could do any recording to your VHS or DVDs. But I am no expert so you may need to call Sony or check with a local retailer.
Yes, the model you have specified above DOES have an Optical audio output jack. I have personally never used the port, but it is on the back with all the other connections. I am sure it is of the usual high Sony quality and will work to your satisfaction.
The sound is decent: nice range of volume, just a bit treble heavy, though unless you're an audio/cine-file, you probably won't care.
And you can connect your tower directly to the television via a simple twin-sided, male audio-jack cord.