Opinions on what to upgrade first; speakers or DAC

Okay, so i have been piecing together a moderate system for my ultra tiny apartment.

The setup currently consists of:

B&K AVR202
Pioneer ELITE BDP-05fd
Vintage KEF C-Series speakers with NOS woofers just installed :)
Apple TV fed to the B&K via optical
Panamax line conditioner
Audioquest King Cobra interconnects from analog outs on Pioneer to B&K
Paul Speltz anti cable speaker cables

I have been toying around with the idea of upgrading something, i guess because the last setup i had sounded leaps and bounds better it was:

Audible Illusions M3A pre
Classe CDP.5
B&K Ref4420
B&W CDM9NT speakers

I know we are obviously talking about two totally different price points, but i am taking opinions on what would be the next best upgrade?
Getting the best speakers that you and only you prefer is the usually the thing to do. It is the last interface beside the air waves pulsing in your general direction.
Opposing view: make changes downstream first, so that the highest quality signal you can afford is what's coming into your current speakers.
Upstream or downstream? Good arguments for both. Personally, I find it harder to choose a good pair of speakers I like - their 'personalities' vary so much, where upstream the variances seem less pronounced. For me, getting the right speakers makes all the difference. The rest is much easier.

(Although I must admit your pioneer source is clearly the weak link for 2 channel music).
This has been a hot topic of debate since the 70s. My feeling is that you should upgrade the weakest link first, which is usually the speakers. Some argue that information lost at the source can never be recovered, so start at the source. I disagree, because information lost at the speaker is still information lost. The losses incurred from a mediocre pair of speakers (especially in bass and resolution) are usually far higher than the information lost in a mediocre CD player. However, KEF made some very nice speakers, and if you're happy with them, I'd go for a nice Sony ES cd player. Dirt cheap used, and very nice sounding.

I must agree with Thedautch. Source is extremely important for a quality sound. You could have megabucks invested in amplification and speakers with a mediocre CD player, and all you would get is the ultimate ability to hear how mediocre the CD player really was. Within their limitations, speakers can only reproduce what is fed into them. I proved this to myself years ago when I had about $15,000 in electronics driving a pair of $300 speakers temporarily. It actually sounded surprisingly good. Now I do agree, a system can only be as good as the weakest link, but a poor quality source cannot be improved by any amp or speaker.

The analog audio out from the Pioneer is probably a very inexpensive circuit, since the player is designed for video. I would try a digital audio out to the B&K to use its DAC and analog circuits. If you do notice an improvement, then an outboard DAC would be better still, or just add a very nice CD player.
I will take great speakers and an adequate source over a great source and only adequate speakers any day. Speakers first!
The upgrade the speakers, then the DAC.

I upgraded my speakers last. I wish I would have upgraded them first so I could tell how good or bad my current system sounded.
the speakers, did someone say CD player? Isn't that as useful as the 8 track now?
speakers would give you a better upgrade for the same money.
Correct the weak link first, in this case I`d improve the the source as the speakers are decent. Information lost upstream won`t ever be restored downstream.The only thing better speakers will do with a poor source is just reveal what precedes them ,warts and all.