Upgrade my CD player or buy a DAC?

I think that most would agree that the DAC has a more significant impact on sound quality than does a transport, especially at your price point.

Test 1: Connect your CD player in parallel through the DAC and directly to the system for an A/B comparison of sound quality.

Test 2: Connect a 2nd CD player to the DAC using an identical CD and do the same A/B comparison.

I suspect that you'll confirm that the DAC is a better upgrade.

Also, a DAC can be used with multiple pieces of equipment. I do not believe that you could get a new CD player that can double as a DAC for your budget.

I second Griffithds's recommendation: Benchmark DAC1. If you're patient, you can find one second-hand for $600. If you don't like it, you can sell it on without a problem. It's a fantastic piece of equipment.

Thanks for all the input! I was leaning towards a DAC and I have heard good things about the Benchmark DAC1. Are there any other DAC's you would recommend? The Musichall 25.3 also caught my eye.

The Benchmark DAC, which I have auditioned a fair number of times, has a large
following for good reason: it digs out detail like no other I have heard. It is
impressive and you may love it. My own preference ultimately went to a DAC
which I felt provided detail, yes, but also a special sense of the overall flow of the
music. Both the trees _and_ the forest: I hope I may use the analogy without
appearing to denigrate the Benchmark, which I repeat is an extraordinary DAC. It
may be just right for you.

the benchmark was way too cool sounding to me, almost fatiguing. i have a music hall in second system that has an upgraded tube and i prefer that over the benchmark. the wyred 4 sound dacs are much better sounding that both these units IMO. i thought it equaled if not bettered the ayre dac which is a great dac but limited in input.