IPOD with Dock or not. Help?

Forgive my ignorance but i am fairly new to this.
What is the difference (sonically) between hooking up an IPOD directly into a Preamp (ARC Ref 2) using the earphone out and a dock like the new Wadia for example. I know that GNSC mods the Wadia Dock.
I do not have CD's and no CD Player. My system is all analog (Vinyls).
My girlfriend has a Shuffle with music from ITUNES that we hook up to the Ref 2. Sound is OK for background music but that's about it.
How do i get better sound if at all possible? Should i get an IPOD Classic to start.
I understand this is not going to nearly approach a 15K vinyl playback combo.
Any help on this much appreciated.
Here's the deal.

When you are using the iPod direct via the headphone output, you are using the digital stream from the iPod, going to the internal DAC (digital to analog converter) in the iPod going to the analog output stage of the iPod. If you are using the iPod Shuffle for this, you are entrusting a $49 device to perform all of the functions of your digital playback system.

Many folks serious about digital music will spend thousands of dollars on a CD transport (or music server) and thousands on a DAC (digital to analog converter and analog output stage). And it still isn't likely to please an analog fan who's willing to spend $15K on an analog rig!

BUT! There are alternatives. The new Wadia iTransport allows you to retreive the digital music stream from an iPod and send it to an external DAC for conversion and analog output. If the digital format on the iPod is a lossless format, it "should" be just about the same as using a quality CD transport or music server. So, you would only be limited by the quality of the DAC and cables you choose.

If you want to get decent sound directly from an iPod without the expense of external components, I think you might be limited to buying a modifed iPod from one of the modders like Red Wine Audio or Bolder Cable.

Lastly, you're also likely going to need to insure that you are ripping your digital music using a lossless format and not low resolution MP3. You'll never get great digital sound using a lossy file format.


Unless your girlfriend starts burning better resolution to the Ipod than downloads, you will never get decent sound. Itunes is highly compressed music. It will never stand a chance against your vinyl, no matter what hardware upgrades you perform.
The only way to get good quality sound from that ipod is to burn from cd's and use a high quality format, not mp3 or similar.