This is a tuff question because the best updgrade is alwas the weekest link in the system. For some it is speakes for me it was my pre amp I went from a ARsp16 toa asteix clyspo. What a difference.
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In my personal audio history, the biggest improvement was when I replaced my Rectilinear III speakers with Thiel 3.6s. Of course, the improvement was expected. The biggest revelation to me was when I replaced my very cheap Monster Cable speaker wire with Audioquest Dragon silver. I had been skeptical that wire makes a difference, but this convinced me.
Shakti-sonic hollgraph's- After 30 years as an enthusiast, these devices are the best upgrade I've ever made. Makes one realize just how critical the room acoustics are-and may stop one from the "endless" componment upgrade path. They are just staggering in their ability to create a lifelike stage in one's room. C
I have to agree with the others concerning the source equiptment. Upgrading the turntable or even a CD player can work wonders. Of course all the equiptment must intergrate well with each other. If anyone wants to try a 'new' source component, may I suggest 4 track open reel factory pre-recorded tapes. This is real analog.
The best way to improve any electronic device is to improve the electrons upon which it feeds. Just as a Porsche 911 turbo will likely disappoint someone fueling it with kerosene, so most high end source components will disappoint anyone fueling them with the 120v hash they call power in North America. Put in a dedicated line for your system (20 amps minimum) before you give up on it. Now here's the "regardless of cost" upgrade. Buy the Burmester 948 power conditioner. It's the only one that truly improves the sound of equipment uniformly across the board. But it costs $6500. Every other "conditioner" is really a filter.
While room treatment is essential, if the singer is a dog, how better to hear her rabid salivations than the slap echo from your credit card?
The best upgrade is a balanced one, preferably the one that addresses the weakest links in your system. Short of that, it's like asking the question : Do you prefer to listen to a signal from a superb source that has been compromised by downstream components (including AC hash and room acoustics) or do you prefer to listen to the output of superb speakers that has been compromised by upstream components (and AC hash and room acoustics)? If the system is already fairly well balanced and you want to take it to the next level, I would agree with Warrenh: improve the source first. After that, it would depend on what the new and higher resolution uncovers. Experiment. If a weakest link is revealed, address it. If all the remaining elements are equally "weak" relative to the new source, upgrade the speakers next. There are no easy universal answers, unless you win the lottery...but then again...