Best upgrade for the money ?

I've seen a lot of good advice here especially regarding roomtreatment and vibration control. After that's taken care of my guess is that either splitting off your pre-amp functions to a good unit - tube or solid state- will make a really big difference. If you're not ready for that step, then a speaker upgrade will also make a tremendous difference. I've had a Micromega stage 2 for 5 years and while It's not state of the art, my feeling is the gap is not as large as some would like you to believe. I swapped in the Meridan 508.20 recently, and while it was better, the change was minor compared to what adding my Audible Illusions pre-amp in place of my intergrated's pre(WOW). If your Sim is better than my Arcam 9 was, then I'd start with the speakers.

Speakers are the most important piece in a system. I don't want to run Polk down they are pretty much entry level. i would sell them and try as you are trying to keep the price down I would listen to either the PSB Stratus Gold of some of the Vandersteen (spelling) product. They cost a little more than what you have in mind but it would be worth it. Don't throw good money after bad! Good luck!

The $1.20 Tweak. God knows if it works or not,But my mind thinks it does. And that is what counts.

Go for the Meadowlark Kestrels or something of similar quality. I would not go for Totem 1s although I like them (I have some) unless your amp can deliver a lot of current. Next, start saving for a CD upgrade. You have a nice amp so give it a chance to show what it can do. The tweeks above may give improvement but your money needs to go to speakers and source first.

Well, as usual with this hobby we've run the gambit with opinions so here's mine for what it's worth. I would replace the speakers last, after you have addressed aftermarket cords, possibly dedicated lines to your system unless this is too much of a hassle or expensive in you situation. Power upgrades in my system have always been the biggest bang for the buck. I've Polk 2.3tl's for about 10 years now. I bought Vandy 3A sigs about 9 months ago. Before I bought the Vandy's I was happy with my sound, still am - I have Meridian front end, CJ 17LS pre, Classe CA200 amp and MIT shotgun IC's and 750 speaker wire and aftermarket power cords. I really like the Vandy's but I also really like the Polk's. I had the Polks's back in the system the other day just for fun and I don't lose anything, it is just a little different. I also agree with a poster above that you become accustomed to a particular sould and sonic traits. My philosophy is take your speakers to the higgest level they are capable of reaching and if you get a really high resolution system of electronics go for some new speakers. Good luck.