Good topic but not enough detail to give you an solid answer other than BOTH.
Are we talking digital or analog? Are we talking effects or tracking? In what application?

I'll start with a teaser.

Simply put,

If digital levels are recorded too high, and your converters clip, that simply destroys the audio . Done. Too loud a digital signal the less open it sounds. Fine line here and a big topic.
If analog is recorded too high, it can sound pretty cool or at least still salvageable,

If digital is too low, you can boost the signal,
If analog is too low, it tends to sound wimpy and washed out,

If gains are too low feeding a compressor, the compressor won't react properly,
If the levels are too hot, it will over react,

The sooner you learn the secrets of gain staging the sooner you become pro.
(y)

I agree with audiokid if we talking about very high quality analog gear. An API or Neve preamp sounds great when it is pushed. But that's not true of even reasonable quality analog gear like a Mackie or A&H mixer. They are fine at low levels but distort unpleasantly when pushed. (A good definition of "reasonable quality" is "sounds good at low levels.")

Digital is just as he has said. Pushing everything to high levels is a basic beginner mistake. You record one track that's too quite and then spend the next year overreacting and hitting the red a couple times on every track. Nasty sound. Hard to sum without everything clipping. 24 bits is a lot of headroom. Use it. Try to keep your peaks at -12 dBFS. (You'll end up with higher peaks, but at least you won't clip.)

Not a bad word of advice in sight

One mode of failure is no better or worse than another mode of failure.

BobRogers, post: 385221 wrote: An API or Neve preamp sounds great when it is pushed.

If it sounds good then it doesn't qualify as too much gain.