The reason an iPod cost under $200 is because they've sold a trillion of them. Might look simple, it's not.
You don't need the iPod as your music server. Use your computer and stream your iTunes to your system via an Apple TV or Airport Express. Those cost less than $100 and both have digital outputs. Then all you need for your one box solution is an integrated amp with a built in DAC. Easy to find. This is actually a superior solution to the wadia dock since it can be controlled via an iPhone or iPod using the iTunes "Remote" app.
You don't need the iPod as your music server. Use your computer and stream your iTunes to your system via an Apple TV or Airport Express. Those cost less than $100 and both have digital outputs. Then all you need for your one box solution is an integrated amp with a built in DAC. Easy to find. This is actually a superior solution to the wadia dock since it can be controlled via an iPhone or iPod using the iTunes "Remote" app.