Do I need a DAC for iPod?

I'm not sure if there's still any floating around, but you may want to try finding an Apple TV Gen 1. The have an internal hard drive that can store your music on (limited to 160 gb). Since you have iTunes and iPad etc, you can control it wirelessly with the remote app. No need for the computer to be running.

Or you can get an Apple TV 2, and do almost the same thing. Problem is the ATV2 doesn't have the internal hard drive, so you'd have to stream to it, either from your computer or through AirPlay (not sure exactly how that one works).

The second issue I have with the ATV2 is that it outputs everything at 48 instead of the native 44.1. That tells me it's changing the music slightly. Not sure if it's truly audible or not, but it rubs me the wrong way.

With either, you're best off using an internal DAC. The analog outs aren't anything to write home about.

I'm a huge fan of the ATV1. I currently have the majority of my music synched to its hard drive as Apple Lossless, control it with my iPhone 3Gs, and run it's optical output into a Rega DAC. Sounds excellent to my ears. Everything is self contained, no computers need to be running, I don't have to worry about wireless issues, and so on. And as I'm sure you know, Apple stuff is so easy to use.

I wouldn't trade my ATV and iPhone setup for any other server right now. It just flat out works and sounds great.

Rip your CDs at either AIFF (Apple's version of WAV) or Apple Lossless (Apple's version of FLAC). I went with Apple Lossless because I couldn't hear any differences, and Apple Lossless is 60% or so smaller than AIFF.

Use error correction as well. It takes a few minutes longer, but is better to my ears.

Save your library on an external hard drive, and buy another one as a backup.

To check what your CDs were ripped at, right click on a track, select "get info," and the first tab should say what bitrate it's stored as. 44.1k is redbook CD.

iTunes downloads are 256k, which aren't full CD quality.