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We study the impact of chromatic dispersion (CD) and first-order polarization-mode dispersion (PMD) on systems using binary differential phase-shift keying (2-DPSK) or quaternary DPSK (4-DPSK) with nonreturn-to-zero (NRZ) or return-to-zero (RZ) formats. These signals are received using optical preamplification, interferometric demodulation, and direct detection. We consider the linear propagation regime and compute optical power penalties at fixed bit-error ratio (BER). In order to evaluate the BER precisely taking account amplifier noise, arbitrary pulse shapes, arbitrary optical and electrical filtering, CD, and PMD, we introduce a novel model for DPSK systems and compute the BER using a method recently proposed by Forestieri for on-off keying (OOK) systems. We show that when properly applied, the method yields highly accurate results for DPSK systems. We have found that when either the NRZ or RZ format is used, 2-DPSK exhibits lower power penalties than OOK in the presence of CD and first-order PMD. RZ-2-DPSK, as compared with NRZ-2-DPSK, incurs smaller penalties due to PMD, but offers no advantage in terms of CD. 4-DPSK, as it has twice the symbol duration of OOK or 2-DPSK for a given bit rate, incurs much lower CD and PMD power penalties than either of these techniques. RZ-4-DPSK is especially promising, as it offers CD and PMD penalties significantly smaller than all other techniques, including NRZ-4-DPSK.