Do I really need a Dac?

Like most questions on these forums, yours does not have a definitive answer.

As Mrtennis said, if you have a CD player you already have a DAC. The questions then are whether the DAC you now have inside your CD player sounds as good to you as any external DAC you might buy instead, whether the rest of your system is resolving enough to let you hear the difference and whether or not any difference you hear is worth the additional cost of the new DAC.

My experience is that the reason there are lots of new DAC's available isn't because they're 'hot' right now but because that's where the R&D is being done and where the greatest technological improvements are being made. Of course there's marketing hype but that's the case with every other kind of audio gear, as well.

Only one way to find out if one works for you.
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Donplatt - That your CD player just died is the perfect argument for getting a stand-alone DAC. The transports in CD players always die, usually just after the replacement laser assembly becomes no longer available, and unless the player has digital inputs that allow you to continue to use the internal DAC you're forced to trash the part of the purchase price for the player that went to the DAC.

Transports are disposable, like the tires on your car, they're good for only so many miles and then you walk away from them. DACs have no moving parts and while they may no longer be state of the art sonically they'll make music as long as you want to keep them.