Assuming you don’t have a home theater system, it really isn’t going to make a lick of difference. Assuming you did have on though PCM would probably be fine if you were attached to the TV only, if you bought a receiver then you would choose bitstream because PCM is stereo only (no surround sound) bitstream on the other hand supports DTS 5.1 and Dolby Surround.
Since you are talking about Blu-ray the best audio is high definition audio which can only be done over an HDMI cable. This is called Dolby TrueHD or DTS-HD audio. This is 24 bit 7.1 audio. But you also need a separate receiver to decode the audio and a 7.1 (or 5.1) speaker system to hear it.
The second best audio is bitstream which is 16 bit 5.1 audio. Again you need a separate receiver and speakers to hear it.
PCM audio is 16 bit stereo or 2 channel audio. If you only have a TV set and no HT (home theater) system it doesn’t much matter since the TV will downmix everything to 2 channel stereo.
If you have a compatible receiver ( HDMI switching or repeater receiver ) set PCM.
Assuming you don’t have a home theater system, it really isn’t going to make a lick of difference. Assuming you did have on though PCM would probably be fine if you were attached to the TV only, if you bought a receiver then you would choose bitstream because PCM is stereo only (no surround sound) bitstream on the other hand supports DTS 5.1 and Dolby Surround.
Many TVs don’t even play bitstream audio over HDMI.
Since your TV has only two speakers, PCM will be fine.
Since you are talking about Blu-ray the best audio is high definition audio which can only be done over an HDMI cable. This is called Dolby TrueHD or DTS-HD audio. This is 24 bit 7.1 audio. But you also need a separate receiver to decode the audio and a 7.1 (or 5.1) speaker system to hear it.
The second best audio is bitstream which is 16 bit 5.1 audio. Again you need a separate receiver and speakers to hear it.
PCM audio is 16 bit stereo or 2 channel audio. If you only have a TV set and no HT (home theater) system it doesn’t much matter since the TV will downmix everything to 2 channel stereo.