BEST DAC connection?

I currently own a Chord DAC 64 and I'm exploring the possibility of an Audiophile setup around itunes. I'm thinking about converting my CDs to lossless and saving them.

Naturally I would like recommendations of some of DACs. I'm currently limited to digital optical out with a mini converter as I shall be using an iMac.

Also what are the benefits of a USB dac over a normal one?

Thank you everyone!
Use your current DAC if you can - you will be pleasantly surprised. The big gain comes from eliminating the transport.

The best USB DACs eliminate SPDIF and take the signal directly to I2S which is cleaner and further eliminates jitter. Scott Nixon, Wavelength and Empirical Audio are among those with products in this category.
Chech out Monarchy Digital Interface Processors (DIP), which greatly reduce jitter and alow you to convert the digital interface (e.g., optical connection from iMac to Monarchy DIP, and then coax/XLR (or BNC on certain models) digital out from the Monarchy DIP to your Chord DAC). For non-oversampling DACs their best product is probably the Classic DIP; However, if the DAC accepts 24/94 I would go the 48/96 Upsampler.