Bel Canto Dac 3

when you say that it is ' sonically is a big step up'... what do you mean exactly.

AND is anyone able to definitively say whether USB is more accurate than S/PDIF (ie... is airport express an inferior technology to a direct USB ---> USB connection.)

Is it signature similar to the dac 2 or is known for being more analtical? have you seen any reviews out there?

I'd say that pretty much everything across the board has improved. I'm having to go by memory with the DAC2 since it has been discontinued for quite a while so I haven't played with one recently. So, I definitely can't give a detailed comparison. From memory, it has higher resolution than the DAC2 while remaining very smooth and unfatiguing. Tonally it is balanced more neutrally than the DAC2 as well. I personally found the DAC2 to be slightly overly warm and the DAC3 isn't. Don't misinterpret that as meaning that the DAC3 is cool, because it isn't at all IMHO. Considering that it is almost twice the price of the DAC2 it is no surprise that it is a considerably improved piece.

Sorry, I don't know the answer to your USB question.

Regarding the USB question - I just got back from the RMAF (Denver audio show) where they had done a test of the airport express with a top-of-the-line toslink cable vs. a direct usb cable and the USB cable was the clear winner...

Anyway, it appears that the DAC3 has 5 different digital inputs so I guess one can do one's own shootouts...

Good luck!

I have a Dac 3 in my system right now and am not sure it's that big of an upgrade over my Jolida JD100 w/upgraded tubes!
I can see it's convenience factor if using as preamp but I also use phono and it doesn't work that well with the Pre 3.
That said I only have coax out of my Jolida so I can't speak for the other inputs. Bel Canto suggest on thier website that USB isn't as high sampling as the other inputs and suggest using a good audio card with SPDIF. Whats the point? If you have a good audio card, generally there is an excellent Dac that comes with it. Check out RME or M-Audio.
I really like the new Bel Canto equipment but honestly with the Dac, I'm not so sure. Upgrading tubes in my CD made a profound change for the better in sound quality for about $40. A speaker cable and power cord change moved things up the scale as well. A $2000 DAC had better be leaps and bounds ahead of my stand alone and it just isn't.