Pre amp Vs CD/DVD player with output control

I am considering a digital source (wadia) with built in output capability that can bypass the need for a pre amp.I would like to hear some views on the good or bad of implementing this setup vs using a preamp.
Currently using a ARC LS16mk2 driving a pair of Audiovalve
Challanger 180 monoblocks.
I think you can do it much better than anyone who will suggest in this post.
From the tech stand point, your amps can be driven with no preamp.
BTW how's LS16? doesn't it have too much gain what 'time' of volume control do you normally listen?
Look into the new Burson Audio HA-160D. It is a high quality DAC with USB inputs for computer or digital coax for use with a simple transport. It also has a great sounding 24-step ANALOG attenuator AND 3 switchable sets of RCA inputs. Another added bonus is it can be used as a fantastic sounding headphone amp for either it's DAC or pre-amp analog inputs. For around $1000 new, its very versatile.
The digital source should be creating the volume in the analog domain. It only takes a little elow 100% to lose a LOT of bits of resolution. The #1 reason against a digital source direct to amps. (IF you do have an analog volume in the digital source, then this comment does not apply.)
The digital source may not have enough current to drive an amp directly. Some sources are not designed to drive an amp well. The is the #2 reason against a digital source direct to amp.
The third reason against it is if you ever want more than one source, you are back to square one.

The pluses are greater resolution, another veil gone between the source and amp.
Digital volume controls do not lose resolution if properly implemented. If your D/A is processing data at 24 or 32bit resolution, then you will not lose resolution at any reasonable volume setting. Wadia products are designed to work perfectly well without preamps. On the other hand, some people just like how a dedicated preamp sounds in their systems regardless of colorations introduced.