Microchip compares mechanical and digital potentiometers to digital. This app note explains the theory behind both versions, and their advantages and disadvantages. [via]
Mechanical potentiometers have advantages in terms of having a wide variety of values available and tighter specifications such as nominal resistance, tolerance, temperature coefficient, power rating and temperature range specifications. But in many applications the overriding
factors are related to environmental and reliability issues. These characteristics are not necessarily specified by the mechanical potentiometer vendor.
Digital potentiometers go hand in hand with the drive towards digital system control. This type of potentiometer is considerably more robust that its predecessor, the mechanical potentiometer, in terms of environmental exposure issues and longevity with repeated use of the wiper. But beyond the reliability issues, the digital potentiometer offers hands-off programmability. This programmability also allows the user to repeatedly and reliably return to the same wiper position.
Comparing digital and mechanical potentiometers - [Link]