I"ve been mucking about with digital audio for years ie since the first cd players came out (I fell for the hype of perfect sound).
I invested in a Meridian 200 transport back in 1991, figuring that I would never have to buy a CD player again just upgrade dacs. Currently I've got 3 dacs:
MF A324 circa 2003 cost about $2,000 back then!!!
Cambridge DACMagic circa 2009 about $500
Rega DAC 2011 $850 from CAV (still awaitng birthday for unpacking)
All I can say is that DACs are offering better and better performance at cheaper and cheaper prices all the time.
The MF unit is a real audiophile device built for old style CD playback giving ample bass, sweet midrange and a rolled off treble that was typical of the time.
When I moved into Squeezebox territory, I needed a DAC with multiple digital inputs so I gave the DAcmagic a try. For $500 great little unit with top tonal accuracy (especially midrange) but limited bass output and a slightly scratchy treble as well as a rubbish power supply that fell to pieces in months.
Looking forward to trying the Rega as I think it's going to provide the ultimate compromise between performance, flexibility and cost.
However as successful as the DAc upgrades have been over the years the other upgrades that have been most successful have been power cables!!!!!
I know it should'nt make any difference but they do! Running high spec (and expensive) power cables to all devices including Squeezebox and Dac has improved the SQ out of sight- giving a deep dark sound stage with pin point imaging, deep but tight bass, sweet extended mids and trebles.
This stuff can sound like snake oil selling and I don't know why it works but it does!
I even bought an upgraded power supply for the Squeezebox from CI audio which worked wonders and have already ordered a good spec IEC -> C5 adaptor for the Rega when it comes into service.
As you can see I really drunk the coolaid on power cables - I don't know why it works but it does.
So I guess I'm saying next time you're looking to upgrade - maybe look at power cables before anything else!!!!