Best upgrade for the money ?

I have to agree with Dekay. Room treatments are a must, and everyone ignores the effect a room has on a system. Most people end up buying equipment that sounds good in their room, and never experienced the full potential of the equipment they didn't buy because they never dealt with the anomalies in their acoustic environment. They basically tune their room with electronics, which is very expensive and never really hits the mark unless you just get lucky. Even changing a cable or doing a tweak makes a difference in how your room reacts to your system. Rememeber, speakers move air. If you change the way the speaker moves it, the anomalies in your acoustic environment will react differently. And just about everything you do in front of the speaker does change it. I doubt very much that anyone can claim to have a completely dead room. This really hit home for me today before reading your post. I was one of the first buyers of Argent Room Lenses, and they have been in my system for 5 years. They are the oldest component in my system. Why? Because they apply to every change I make in my system. They are moveable and versatile. Today, I was auditioning the new Audio Magic Clairvoiant power cord ($1500 - review on Sounstage to come). Most of the changes I liked, some I didn't. Then I started moving the room lenses, and was able to "tune out" all of the problems while keeping the improvements. Next, I put some Shakti on-lines on one of the other power cords. Again, some good things, some bad. The Shaktis made things more forward in the soundstage. I moved the center and outer lenses back 6 inches, and voila'....the soundstage deepened. Now the midrange was too recessed. I bought the middle lens forward three inches. Perfect! Now I had the blackness, rich harmonics, and detail without the forward presentation I had before. Without them, I would have never realized the potential of either of these devices. There are many reasons people don't do room treatments. They aren't exactly beautiful if you have to use your stereo room as living space. They aren't as much fun to buy as something that plugs in, hums, gets hot, and has pretty lights. And there is always that intagible "I don't think it will work" because doubters have never ventured there, and it's easier to dismiss the idea than experiment with it and gain the knowledge. I see those people posting comments on this site all the time. Used and sometimes new lenses go for around $600. to $700. Electronic acoustic tuning devices also exist, but are considerably more expensive. They plug in and have the pretty lights, and don't make your living space look like a gothic cathedral like the Room Lenses (my kids dig them, though). Ever read a rave review of one component, and then read a poor review of the same component from a different source? Or did you ever try something that everyone else says is good, but it sucked in your system? Without room treatments, you'll never know how good your next component really is.

Before changing any equipment following Dekay's advice. Speaker placement and vibration issues are the most effective tweaks. Your interconnects and cables are fine, they should be the last thing you need to change. After you address the setup issues your next step is to upgrade your source. But I suggest that you wait until the new digital formats have settled out (maybe 6 to 12 months). Your system can be upgraded, but your budget is insufficient to effect a fundamental change. New cables, cords etc. could help, but they are halfway measures. By this I mean they could produce an improvement in sound in your present system, but they might not survive your next level of upgrade. Be patient and take your time. New equipment is not always the appropriate answer.

What? Are you all from Mars? IT IS THE SPEAKERS!!! Have you ever heard Polk speakers with any thing close to resolution? Depth? Good imaging?

If I were you I would take my Polk speakers to a high end store and compare/contrast them to other speakers. If it's not the speakers I have had the most improvement by adding a Bel Canto Dac-1 and/or the Black Mamba (used)or EEL power cord purchased on auction.

I must agree with all those who suggest speaker placement and room acoustics as a first step. Speaker placement is free, except for your time, and room treatments can be as simple as rugs and curtains or as complex as ASC or EchoBuster acoustic panels and bass traps. Both can make or break a system - no matter how good the equipment. There are a number of web-sites and magazine articles that have helpful tips and hints on how to go about placing speakers. I was, and am still, having a problem with certain bass frequencies. Robert Harley's book on high-end audio talks about room resonance modes (frequencies that are exaggerated due to the room). I used his formulas and calculated the resonance modes. I went to Radio Shack and bought a handy-dandy SPL meter and tested his theories. And what do you know?...the calculated modes matched pretty closely to the measured ones. My point is, that I could have assumed that it was my speakers, or my amp, or my preamp, or...well, you get the picture. Now, an amp with thinner bass would probably work well. But, in my opinion that wouldn't fix the real problem. The room is the real problem. Think about upgrading electronics *after* doing the free stuff...speaker placement and room acoustics (I suppose rugs and curtains aren't exactly free). Whose knows, you might find that your system is as good as you need it to be for the moment.