For a $1,000 I would get a Melas Sha 1 or other good headphone amp for a few hundred and budget $400-500 for great used heaphones (see headfi.org). If the budget is $1,000 you really can't buy a DAC that is going to offer you any real notable improvement over the SB and still get the rest of a system (either headphone or otherwise). You can buy a dac if you want, but you won't get any improvement (based on this budget).
For $10K, I would look at a used pair of Gemme speakers (Katanas used are around $3,500 I think)or other brand that are quite forgiving in terms of placement in relationship to performance. An integrated amp (Moon, Krell 400xi, or othes) and look for an older DCS DAC for about $2,500. With cables, etc. . . that should give you a really great sounding used system.
Another fun system would be a pair of Coincident speakers and a Manley Stingray integrated amp - which would have enough power for the Coincident speakers.
I've had systems set up in my bedroom, which is fairly well sized. But in the end, I always end up back with my headphone system for any real listening as I lay in bed and read. . . I do happen to have a pair of speakers hooked up to a DVD player via a crappy little digital Sonic T amp just so that music can play in the background on occassion - but it really isn't used that much for anything other than watching movies (also a rarity). Certainly isn't serious listening oriented.
