What will a DAC do for me?

I have two DVD players, one a Panasonic HDR-M80 and a Denon DVD-1920 that I also listen to CD's on. What would a DAC do for me? Would one really help or am I wasting bucks?I have been looking at some used ones around the $400-600 range. What brands would you recommend that I could pick up? Thanks.
I also love to play multi-channel music on the DVD. Just thought I would throw that in.

The rest of the audio part of my system:
Sherbourne seperates
Paradigm Studio 40's front and rear
Paradigm CC470
Paradigm PW2200
i was in a similar situation and I can say the right DAC will definately improve your sound. What I found is a good DAC takes the edge of digital formats and seems to give a greater three dimensional sound stage that typically comes from vinyl. I bought a Reimyo DAP-777 that was more than you were looking at and have loved it for years. It is the one thing I have not changed over the last few years. I would look at a Birdland audio Odeon-Lite DAC. You can get them for about $400 to $600 used. A real value since they are not in business anymore is a California Audio Lab Alpha DAC that you can get for $400 as well. Good luck.
If you mod the Denon 1920 I think you would have to spend alot of money(on a DAC) to match the performance.
Something like the Poth Audio Dac Ah $175 shipped would eat the stock Denon for breakfast. Hearing the difference would be VERY noticeable. If you don't hear the difference for the better. There's a bottle neck some where else in the system. Going the Dac route will allow you the ability to listen to multi-channel through your multi-outs on the player without interfering with your 2ch through the Dac. Some modders do away with the multi-channel and concentrate on two channel performance when modding players.