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First and foremost, I don't have the most discerning ear around. When it comes to what sorts of audio connectors I prefer, I generally look at how many actual connections are present in the connector itself. An RCA connection, for example, has two and only two points of contact--a positive and a negative. There is no possibility for a ground, and therefore no possibility for a 'balanced' signal (basically, I understand the whole 'balanced' versus 'unbalanced' debate as, succintly put: balanced cables are less succeptible to electricity spikes, and are better. I've had the physics of them explained to me before, but...).
With a 1/4" connector, you can have either two or three points of contact--a tip and a sleeve; or a tip, ring, and sleeve. Because of this, a 1/4" TRS (tip-ring-sleeve) connector can carry a balanced audio signal across it.
XLR connections, can carry a balanced signal, AND are more secure connections.
This is where I think your associates might be focussing on, how secure an RCA cable is as opposed to a 1/4" cable. Generally, consume-grade RCA cables don't have an especially tight fit to them, but you can certainly get RCA connections that are very high quality and very snug.
Then there are a number of other variables that will influence how good the connection actually is--the quality of the cable used, the lenght of the cable, the material of the connector itself, and so on.
So basically, there is no fundamental difference in the quality of the connection an RCA or 1/4" connector provides, in my experience. I speak here only in terms of the actual connection, not the security of that connection. RCA cables are less secure, so I prefer 1/4".
The only argument one might able to level against the RCA conneciton in favor of a 1/4" connection is that the actual surface area of the 1/4" connector is greater than that of the RCA connection, and therefore might provide a better transfer of information and a reduced risk of having some sort of fault due to manufacturing flaws.
The whole industry should move to XLR as a standard in my opinion, as they are the most secure connections available, aside from Neutrik 'Speak-On' connectors, which are just plain bad-ass! How secure a connection is is what I typically look at, but my day-job is A/V system installer in higher ed learning spaces and A/V event support, so...
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