Benchmark 1, 2 & 3

I would echo @dne statements, I have owned all 3. I could not tell a difference between 2 and 3. From 1 to 2 was a massive improvement for me. Allowed me to go direct to amp and sell a preamp. I think a preamp is still better but I needed the cash at the time and the 2 came to the rescue.

DAC1 was extremely clean, but a little thin sounding in the lower midrange. Replacing op-amps made sound a little more vivid and fuller, but DAC3 is much better overall. Sound is still very clean and extended on both ends, but midrange sounds much better - cello sounds more natural, male voices have more "chestiness". Background is darker, sound more refined.
I jumped from DAC1 to DAC3, so I cannot comment on the sound of DAC2. I use DAC3 with AHB2 amp with great results.

I’d like to mention another difference between DAC1 and DAC3 HGC (Hybrid Gain Control) - volume control. DAC1 volume control got static noise over time. I was able to slightly bend the back of the pot and force in "Fade lube" spray (Deoxit). It worked fine for few years after that, but started to exhibit the same problem again. DAC3 HGC, having digital volume control for digital sources, is free from this problem without any negative effects (at least I don’t hear any).

Some time ago I asked Benchmark about the sonic differences between my DAC2 HGC and the DAC3 models and this was the response: “As long as you have the newer firmware (2.2) you have better than 95% of a DAC3.  If we thought it was an appreciable difference, we would have an upgrade program.”

Wow, many businesses would try to get you to buy a new unit. Good for Benchmark 

How do you know the firmware level and how do you upgrade It?

I've been using a Terminator for a year and used my old DAC2 HGC to debug a problem.  I was stunned by how good the DAC2 sounded.  Great bass depth and control, and more upper midrange energy, which might be a better match for my aging ears.