Dwpc- Obviously, you'll be the only one who can decide if it's really worth upgrading. I believe that CDPs have improved considerably, but you'd probably need to go higher up to find truly "significant" improvements. Good used equipment in the $1K to $1.5K range can and will make you glad that you took the plunge. IMO, don't waste your money on intermediate steps. There will be differences, but not necessarily top-to-bottom improvements. Also, unless the rest of your system is up to the task, many of the subtle improvements may not be readily discernable. In the end, you'll have to let your own ears be the judge. Good luck.
1st Question-have CDP 's really improved in recent years?
I've been hanging onto my dbx DX3 CDP (since '86) because the dbx processing circuitry (impact restoration & "ambience control") is exceptional, but it bass response is weak compared to FM and DVDs. I have a recent Sony DVD player in the system, but it's bass is no better from CDs; and the overall sound is considerably poorer than the old dbx. This makes me wonder if a mid-fi CDP upgrade (~$500) will be a real improvement.