Tricky questions to answer, however, as someone who has received replacement goods, services and food bank support on a number of occasions, I'd have to say which is best depends on the situation the cash or goods are received and the intention behind why it is being given.
For a start, with choice comes dignity, but also responsibility. Could I choose to spend the money wisely? Who knows if I could trust myself not to blow it on junk.
Although that's not to say I would be keen or happy to receive all my main income in services and goods but if as additional support or replacement goods then I'm quite happy to accept goods instead of cash. Perhaps the "beggers can't be choosers" philosopy is lodged in my brain?
On the one hand, it takes the hassle out of choosing goods and arranging delivery, the flip side is the items are not always as suited to your needs or as you'd like them to be.
However overall, in my opinion, choice is definitely more dignified than being handed goods unless you're able to pick those goods yourself and have them paid for by others.