In my very limited experience, yes, differences can be heard (in a good, highly resolving system, of course). I just recently bought my first outboard DAC, a Theta DSPro Basic IIIa, to feed from my Adcom player. I went to a dealer and picked up two interconnects, a $60 Vampire, and one made by a previously unheard-of (by me) local company (VA) called Empirical Design, at $150 (FYI, they are supposedly run by a guy who used work for Goldmund, and the story is that this IC is basically the same as one they used to market for about $450). Both are coaxially shielded, 75ohm cables at 1m, the Vampire being silver-plated OFC copper with PE insulation in an average-diameter soft PVC jacket, and of course using their own connectors; the Empirical Design employs "pure" copper conductor and shield in foamed Teflon insulation with a narrow-diameter Teflon jacket, and what appear to be Tiff RCA's. If I was hoping to be able to return the cable that would save me $90, I was disabused of that notion within one hour's burn-in and auditioning. The primary areas of sonic improvement I can point to would have to be treble smoothness, followed by superior soundstage depth and transparency to low-level detail, but the truth is that the costlier wire just gave a presentation that clearly exceeded overall in its naturalness and "organic wholeness", leading to an increase in general believability. The cheaper stuff, while still sounding better with the DAC than the CD player run on its own, seemed more coarse, flat, and mechanical in comparision. (Digital IC performance is said to be highly dependent on the partnering transport and decoder in question, so this result is not to be taken as universal.) I intend to continue with further comparisions (within a reasonable budget) to see what more is possible, and have become curious to check out one of the outboard jitter-reduction devices such as a DIP as well, since my "tranport" isn't in the same league as the processor. In any case, it may not cost anything but your time to experiment (given a helpful dealer), so you should definitely try an upgrade and stop wondering. Good luck!
Digital Interconnect Questions
I've always used inexpensive consumer grade digital cables of the $25 - $40 variety from Circus City, GoofGuys, etc. I'm talking about the 75ohm coaxial cable for attaching CD transport to DAC. Is there a significant difference in sound quality with higher-end digital interconnects? I've always been skeptical of over priced cables, especially the digital interconnect. I'm not seeking a debate but would like to know if anyone can actually hear a SIGNIFICANT difference. Thanks.