I am a grand over budget already, but I choose the ARC CD3 with a Grado headphone amp and RS-1 phones. You can't beat having a great source, and the Grado set up will let you hear it. I could have gone for speakers if ARC still made the CD2($3500)VS. the CD3($5000).With the CD2,and Sound Dynamics RTS3's($200 from Audio Advisor),I still would have $1300 left for an amp and wire.I would look into some roughly $1000 tube integrated amps like the Jolida or the Antique Sound Labs. My point is if your source sounds bad, you can't dig your self out. Think about $3500 speakers run by $1500, worth of electronics. That could be real nasty!