I also used to have a Directstream DAC MK1 and I did notice the same thing: the sound improved whenever I would recycle the power, or even better, when reloading the firmware.
After reading some of the posts from Ted Smith regarding the digital filtering going on in the DAC, I assumed that the sound improved because following those events (i.e. power recycle or firmware reload), the memory where all the previous filtered values gets cleared and we are probably listening to a purer sound (i.e. less filtered). If I were you, I would ask your question directly to Ted Smith via the PS Audio forum webpage.