Economical alternative to Wadia ipod dock?

I'm helping my 20-something son put together a system. He knows digital; I know analog...kind of. He currently stores the majority of his music on an ipod. What docking mechanism for the ipod would you recommend to feed into a DAC for a best-musical-experience for the buck? From what I can tell the choices out there are the Wadia 170i and ?. Thanks in advance for any ideas you can give me.
Hmmm... My son has an apple computer, stores a lot of music on it, and now I'm wondering if it has the same ipod in/ digital out feature that the mac mini has. Unless you know this feature is specific to the mini, I should see what the possibilities are for his computer. (I'm trying to put this part of the system together without him knowing...graduation present.)
All later model macs have a digital/analog headphone output that will do analog through a 1/8" headphone cable OR toslink with an adapter. It works incredibly well and when using for music you don't actually play direct from your iPod, but music comes from iTunes and can be digital out or analog chosen in the audio set up menu. They will output up to 96k resolution too so if you have a dac which will handle high res like the PS Audio digital link III or Bel Canto dac3 (I sell both) it will work marvelously. If I can help you with anything feel free to contact me through my web site or audiogon.
It sounds like he stores a "primary" copy of the music on his computer, so I'd definitely just look for a good DAC he can connect to that, ideally via USB. Think Cambridge, MHDT, Wavelength, etc. Connectivity directly to the IPOD is just too limiting, at this point.
I tried the Wadia and found it ergonomicaly inept. Its a great concept, but not user friendly at all IMO. I don't want to have to control it using the iPod, and the remote is worthless.

That leads me to (haven't bought it yet) the Apple TV. Think of it as a large (physically, not capacity) iPod with a Toslink digital output. Very easy to set up and control, and because it uses its own internal memory, no computer needs to be running. That also means no dropouts due to interference. The Apple TV can be controlled using a TV and/or an iPhone/iPod touch.

Going straight out of a computer is a great idea, if its not practical in his situation, the Apple TV should work very well. I played around with one at the Apple store, but they didn't have the larger one in stock at the time. I've been meaning to pick on up but haven't gotten around to it.

Also, don't base your decision on the Apple TV on the store employees. They have no idea what they're talking about regarding it. A team of 3 people all gave me contradicting info that they argued about. Among other things, they all told me that the iPhone/Touch can't control it. They also told me a universal remote like a Harmony can't. Wrong on both accounts.
Apple TV is the way to go: $225 (too bad the price just went up it was $199) for the 40GB model. It has an optical out, is extremely easy to use and sounds excellent. I avoided the Wadia becuase it clearly was "ergonomically inept" -- the AppleTV is the opposite. And you can stream internet radio at reasonably high sound quality.

Plus there's a lot of video options if that is of any interest.