New CDR.. or add DAC?

Greetings everyone,
I am currently auditioning a Cambridge Audio DacMagic. Right now I have it connected to my NAD C541 (not the i version)CD player.

I am pretty pleased with the NAD/DacMagic combo. While this seems like a pretty economical way to improve my source, I am wondering if there are better options in the $500-$1000 range? What are most folks around here doing.. upgrading their CD players, or adding DACs?

Thanks in advance.

Even if I don't use the DacMagic with my CD player, I'm pretty sure I will end up putting it to good use somewhere else in the house.

It's a never ending quest. A better dac begets the desire for a better transport (in general.) If you care for the sound quality of something like the new Benchmark dac, many claim it's jitter rejection makes it's performance the same regardless of the source. Most dacs improve hand in hand with better transports. Then, there's the option of hard drive based systems that offer another route around the dependence on good sources. Some people swear by inexpensive non-oversampling dacs and find more expensive mainstream digital technology to sound inferior. So, there's no one right answer as to what's better. You'll get a different opinion with every response probably.