Get a new CD player or external DAC?

Currently my digital sources are Cambridge Audio 540C V2 and Squeezebox (SB3) connected to Krell KAV-400xi with Sonus Faber Concertino Domus speakers.

I would like to upgrade my digital source, i.e. CA 540C V2, something puzzle me whether should i get a new CD player or external DAC with budget of USD 1,500?

I wish to get advise from you and your recommendation either CD player or external DAC.

Advantage of external DAC will be i can connect my the other digital source, i.e. SB3.

Thanks in advance.
I'm having pretty good luck with Cambridge 840c. Using it as both CDP and DAC for xm, at a cost of $950 on agon. However if your CDP is in good shape I would think $1500 would get you a better sounding stand alone DAC(used).
Do you listen to the SB or CD more? If you listen to the SB a lot, then I think getting a DAC would be a more versatile choice. If you like your cambridge gear, then you could get their new DAC (the magic I think it's called?) from Audio Advisor or another dealer and evaluate it, that way if you don't love it you can return it. I have a Bel Canto DAC 3 and love it, but if you're budget is around 1500 there are a lot of choices, including the New DAC from Bryston, the Benchmark, PS Audio, etc.
A great standalone DAC, and more musical to my ear than the Benchmark, is the Apogee Mini-DAC. However you can't get it new with USB any more, you have to go FireWire. If you want USB you have to find it used.

One more thing: the quality of your transport and cable is very important. If you get a DAC worth $1500, you will need a good digital cable (at least a VH Audio cryo Pulsar 1.5m long) and then, your Cambridge player will show what made it an entry-level buy. I wouldn't count on being happy with that combination for long.

If you decide to upgrade your CD player, the best one I know at your price (for a new unit) is the JAS Audio Musik 1.2.
I struggled with the same issue and went with the Benchmark DAC1 USB (rest of system is Krell 400xi, Totem Forest, Apple Lossless running on HP PC). Very pleased with it and have no plans to add a CD in the future. My wife also likes that she can run Pandora easily through the system.
Check out the TADAC by Tube Audio Designs.
Qualifier: I have no association with them/TAD other than being a satisfied user of their product.
Good Listening!
Thanks for all response, your recommendation will be further studied for consideration. I forgot to mention my music taste is towards musical, warm rather detail and analytical.

@Chewy - CA 840C is in my first priority list as it serves as CD player + external DAC (with its digital input).

@Mimberman - Though i have ripped all my CDs into lossless files, i still listen to my CDs occassionally, in term of ratio between SB3 and CA 540C, it's approximately 60 : 40.

@Dokosan - Benchmark DAC1 USB is my first choice of external DAC, is it more musical, warm produced by your system after adding Benchmark DAC1 USB? What is the different between Benchmark DAC1 USB and Benchmark DAC1 Pre? The obvious i can see, the latter provides more digital inputs.

@Tobias - Noted, digital cable (coaxial or toslink) is crucial. What about analog cable (analog output from external DAC to amplifier)? Krell KAV-400xi provides balanced analog input (XLR/AES).

Auronthas - You're correct that the DAC Pre adds analog inputs; that's the only difference. I am running DAC 1 in balanced mode into the 400xi. My understanding is that balanced is the preferred choice but I can't give you the technical explanation other than the gain is slighly higher.

I would not say that introduction of the DAC 1 warmed up the system. This DAC is noted for being very detailed and accurate which is what I was seeking. If you are looking for a warmer sound you may want to consider some of the tube dacs (wavelength brick is in the same price range). There seem to be a lot of new USB dacs coming to the market such as Musical Fidelity and Cambridge.

If you make the move to a DAC, you may find yourself never handling a CD again other than to put in your car (unless you have a car with an ipod jack). It is extremely convenient.
If you are looking for a warm sound from a DAC then you could go with an MHDT Havana. I really liked it when I had it in my system, although if you're switching sources frequently it's not the most convenient since it has no input select switch. I preferred the Havana to the wavelength brick in my system. I know people also like the dacs from Ultra Fi and Red Wine Audio. The Benchmark is a much more analytical sound. I had one and it didn't mate that well with my old system. The Bel Canto which I have now isn't tube warm, but I find more organic than the benchmark in my system. I'm running balanced as well.
Auronthas, the Benchmark DAC-1 is an extraordinary product. I have
compared its sound carefully with that of two other DACs at equal or higher
prices. I found it brought out details in the recording like nothing I had ever
heard. Get a listen if you can. If you can't, and if you prefer warm over
analytical, then I would bet you took to the Apogee Mini-DAC more than the
Benchmark. Both have XLR outputs.

The situation with digital cables is rather special. The point here is that any
digital cable will do its best in most setups only if it is 1.5m long. A cheaper
cable of that length will beat a better but shorter one for coherence and
clarity. Analog cables don't have this length requirement. The shorter you can
make them, the better they sound.

With any cable, buy the best you can which still keeps cost in perspective.
The idea is not to pay for cables with money you would be better off using for
a major component upgrade.
Thanks for all response, it's very helpful indeed. Now my task is to audition with various external DACs on my setup.

I am not from US nor Europe. Most of the time, our local hifi suppliers/agents not allow us to bring external DACs home for audition, that's why i need some advise from experts here. If you have almost the same setup as mine, your advise is very useful to me.

What about Cambridge Audio DACmagic? Is it warmer than Benchmark DAC1, Bel Canto 3? Is there any technical data or specification (such as THD, S/N ratio, etc.)to determine the warmth of external DAC?

Thanks again.
If you cannot audition and return then Benchmark DAC1 is safe way to go. It is
one of the cheaper DAC's new and it sells at relatively high used price and it is
has been widely respected for five or more years. Just sell it if you don't like it.
The major criticism with it is that it is neutral and highly detailed with highly
focussed (narrow) soundstage - for some people this will be a drawback as it
emphasizes the fact that you are listening to a recording. I like its honesty.