For a dock, I use the Cambridge iD100 and have been very happy with it.
For cables, I use DH labs coax or optical (I seem to like coax the most) and have a silver/teflon cable that was made for me. I go between the 2 coax's from dock to dac and use the optical with a Mac laptop on occasion.
DAC's are all over the place sound wise and I think will bring the most change so give that some good thought. Sorry I can't recommend any.
luxman has a beautiful dock. for a less expensive dock the pure 1-20 has digital out and you can then find the dac and cable of your needs to have flexibility with all your digital sources. i,m using the pure with a music fidelity v-dac and a morrow dig 2 coax. around 400-500 bucks retail. my 160 g has aiff songs on it and i love the sound and convienence. but with a nice system like yours you may not enjoy the typical cheesy remote the pure has. but by ALL means i would recommend getting a dock with digital capabilities so you can bypass the ipod's internal dac. not very good....
The best sound is using Wadia 170 or equivalent and then a good reclocker then the DAC.
I have a 160 as well, use WAV encoder setting to import both cds and itunes purchases. use a Wadia 171 (newer model) and run that into my Blue Circle 509 DAC - cable between them is a Silnote Audio Poseidon digital rca - very happy with the outcome
Wadia iTransport + CI Audio PSU + good coax
But I think you are paying a premium for that even if it is under your budget.
Also have a look at Onkyo S1 dock with a Kingrex PSU would be a more cost effective solution.
If it were me, I'd use your PC or Mac to the DAC. I really like using Amarra and Pure Music on my Mac.
I use a Wadia i- transport with battery power supply - pace car - DAC of your choice on one system and a fully modded ASI-TEK wadia i-transport on a second system ...both with excellent results
Fully reclocked Asi -Tek/Wadia i-transport with Acoustic Revive SP/DIF cable into quality DAC (I use Antelope Zodiac Gold). Do though consider using a Mac Mini with Puremusic via USB for even better results.
I dock my iPod classic onto a Peachtree iDac, which can take the raw digital data from the iPod and convert it to analog using an ESS chip. Only a few docks are licensed at this point to take the raw data from the iPod. I store my data as Apple lossless and it sounds great on my home rig. Only drawback is that the iPod can't store hi-rez files - no getting around that.
1. PURE i-20 digital dock + DAC of your choice.
2. The new Luxman dock is very good too.
3. Avoid the Wadia, the quality is subpar for the price charged.
I currently use the Wadia i170 and Simaudio D100 w/ excellent results. I've previously used combination DAC packages by Peachtree, Wadia 151, and Bel Canto C5i w/ equally superb results. Apple lossless playback and you have an ultra convenient way to your music collection.
I have the Wadia i170 and PS Audio DL3 with level 3 mods in one system and the Pure i20 with Havana DAC in the other. Both sound very good and when switching them between systems I cannot here a difference, even thou there is a substantial difference in price. Both of them have remotes which work fine. The original Wadia i170 only has coax out and not optical which could limit additional device connectivity options down the road.
Grege has the right idea. Pure I-20 dock, to DAC, (I use a Schiit Bifrost or Bencmark USB DAC1) to preamp or amp.
Get a Bryston BDP-1 digital player. It now has NAS capability so you can play right from the iTunes on your computer if you have Ethernet connection to BDP-1 from router. Even without, if you copy your iTunes onto HDD or thumb drive(s), you will have outstanding SQ and support. For a system like yours, a dock would a massive underperformer.
But what about those of us who need USB out from the dock? I DO NOT want my computer in my lsitening room, just to listen to Lossless files on my iPhone through my high-end DAC with USB (and no SPDIF) input.
I'm using a pure I 20 with an ack dac and it is a an enjoyable sound
For the best sound, I would suggest the following.
160GB AppleTV Classic (New or used). Basically an iPOD with a digital output and TV interface.
DAC: Bryston BDA-1 or Pass Lab D1.
You can control the AppleTV using the supplied remote or use the remote app on your iPhone.
If you wont the best sound use only Ipod touch last generation ! I use it with Onkyo NS-D1 digital dock!
Cheaper and better than WADIA and the sound is absolute killer !
I'm surprised no one asked what kind of music you listen to and how you listen to it. Classical, classic rock, country? Do you sit in the sweet spot or is you music on while you do other things?
Personally, I have a Wadia i170 fed via digital to a Bryston BDA-1 DAC, fed into a McIntosh MA-6900 and finally into Paradigm Reference speakers. Source is an iPOD Nano, some AIFF, some lossless. I cant tell the difference by the way, between the two. Remember, even with lossless, the best you're getting is CD quality.
Good luck. It would be good to hear what you end up deciding.
+1 for the Apple TV using Airplay. Ipod Touch, Iphone , Ipad2 to Apple TV. Optical out from Apple TV to external DAC. Line ouput from DAC to Stereo.
Airplay is wonderful for Internet listening ( Spotify, Mog, Pandora).
istreamer is simple and no need for preamp. not sure of all the different ways to connect, but mine goes direct to an active crossover.
Like so many others I have a Wadia 170 dock going into my Audio Research gear.
All my files on my iPod at in wav form which I found is by far the best format without using a lot of memory.
As far as cabling goes, I am using all Nordost cables along with Kimber digital cable( tried lessor cables but wound up spending around a grand on the digital cable).
My gear is ARC ref3, transport and dac, d400mkii, into Thiels.
Final note is that I am going change my dac to the dac8.