have you tried a diffrent optical cable? optical cables are relatively easy to break (compared to most cables). if you inadvetantly bent the cable too much it could have caused a break inside the cable and it can't transmit the light. plug the cable into the ps3 and see if light comes out the other end (the end you plug into the receiver).
it's possible that the optical port on the ps3 is broken. if you have an hdmi receiver you could use that instead or just go back to using the L/R audio RCA cables. this will at least give you sound without having to get it repaired.
as 5.0 CJ said if you got it repaired locally and they open the ps3 it would void your warranty so if anything else broke you would be SOL.
there is a small chance that the little red LED inside the ps3 is just out of alignment and so it's not emitting it's light directly out the port. you may be able to stick a toothpick or something in there to see if you could redirect the LED to shine out the port more.
(there is a similar issue with macbooks and their headphone/optical port and people have had success fixing it with a toothpick)
'01 Bullitt #0054