upgrade rec. for a cd player, preamp

Speakers first and then mod or replace the CDP. The outboard DAC is a good idea. Perpetual Tech, MSB or Birdland are all good, and can be modded to make them better.

I would upgrade your speakers first. In your price range, check out Paradigm Studio 60's. They are wonderful. I think they retail around $1500 right now, but can probably be had for around a thousand dollars new if you shop carefully.

If you're looking to keep the speakers and upgrade the other components, see if you can demo a good DAC. I don't know the ARCAM 5 PLUS, but I've found the best bang for the buck to be in a good DAC. If your ARCAM already has some fancy Burr-Brown or Crystal DAC in it, then look at pre-amps. I don't have a recommendation here because I have no idea what features are most important to you in a pre-amp.

Cheers.

Tom