The Monitor Audio iPod dock, the i-deck, claims to bypass the DAC inside the ipod and take a digital bistream directly from the ipod to it's own internal dac, which sounds much better than the internal dac. I'm not sure exactly how this is implemented, it apparently gets an audio bitstream out of the dock connector because that's all it needs to have connected, but it certainly sounds better than any other ipod dock I've heard.
http://www.hometheatermag.com/ipodaccessories/106monitor/
http://www.hometheatermag.com/ipodaccessories/106monitor/