The most important piece in a stereo system???

I like Jonathan's last bit of advice, it seems like that's what I've done, as I've built my system around my Jadis JP80 preamp and JA80 amps. My feeling was that the preamp was the most important component, as everything in the sources runs through it, so I stretched to get my dream pre and amps about 10 years ago and have worked around them since. I've been fortunate to have a good room, but I would also agree with others as to the importance of the listening room as well, as I've heard very impressive equipment severely compromised by poor listening rooms.

The source (turntable or CD player).

Think about the audio replication process and the answer(s) are clear: the transition from mechanical to electrical signal (phono cartridge dragging thru vinyl, laser reading a CD) and then vice versa (speaker taking electrical signal and converting to cone/driver movement) are OBVIOUSLY the most critical processes in reproducing audio - everything in between simply pushes electrons around. Therefore, it makes good sense to spend the bulk of your audio dollars on a great turntable/cartridge setup followed by a great set of speakers.

The advent of digital sources has changed this balance somewhat, and I would now counsel someone to spend most of their bucks on great speakers - great speakers hooked up to a mid-fi system will still sound very good, crappy speakers (why does the phrase Bose 901 come to mind?) powered by an audiophile system will always sound crappy.

Speakers = 40-50%
Input source = 20-30%
Sound processing/amplification = 20-30%

I take a bookend approach. I believe the DAC is the most important piece, followed by the speakers, then the pre-amp, then the amp, then powercords,then the power conditioner, then speaker cable, then interconnects, then the transport. I base this on my preception (flawed and colored by taste) on the general level of development in the Audio Industry. I think there's more variation in DACs and Speakers then in the other components, hence perception and taste come more into play than with the other pieces.

Percentages depend to some extent on absolute $. When I bought my current speakers (which I never intend to replace unless they wear out) they were the most expensive component in my system, and on a US retail price basis, a bit less than 40% (ignoring record playing equipment and just counting cdp -pre -amp -speakers and cabling). Ive since upgraded cdp and amp and downgraded the pre and the US retail price of the speakers would be about 25% of the total retail, and actual cost about the same percentage.

Since I am perfectly happy with the current breakdown, 40% on a retail basis for the cdp and 25% for the speakers (more like 35-25 on actual cost), I think that's a good balance now. (About 3% on cabling btw.)

Maybe I agree with everyone. 40 to 50% on speakers you can live with through upgrading, ending up at 20-25% when you're through with the process.