AE,
I have been very impressed with sound of both older Soundbridge and newer Logitech Squeezebox Touch as a source mainly ( I do not use built in DACs of either). Definitely better than anything I had prior and competitive in my mind with the better reference digital rigs I have heard at various dealers. The ultimate complement is that I have a large record collection and vinyl is not getting a lot of play time these days.
I am interested to see what devices like these come along down the road, but I must say, as a fairly picky and particular listener, and also as one who has worked in computer systems and software development for almost 30 years now, that I think the SQ Touch hits a nice target in terms of offering a combo of top notch sound (as a source mainly, I have never even tried the built in DAC though I hear it is not bad), features and effective design overall at a very favorable price point. Definitely a device that when used properly changes the playing field of high end audio considerably and serves as a good omen for perhaps even better things down the road.