Hi Nick,
As my stereo experience has grown from CD listening, I believe the CD source is very important. My first hi-fi equipment was a $70 Panasonic portable CD player, coupled with a Headroom Little amp ($250) and Grado SR60 headphones ($70). I thought this was excellent.. I couldn't imagine why I would need to spend more money.
A few year later I finally broke down and bought a speaker system. Paradigm Mini Monitors, Yamaha CDC-775 CD changer, HK 3470 stereo receiver. The step from the portable CD player to the Yamaha was amazing, especially after years of listening to my headphones. Even though my Grados are better than my Paradigm speakers, the CD source clearly added something special.
I should note that I decided on the Yamaha by auditioning. I brought several of my own CDs, in various genres, to the local Yamaha dealer, along with my headphones, and sat down and listened. Some people may claim that DACs don't make much of a difference. There was something like an $80 premium for the 775 over the CDC-685, and the only difference was the DACs. Both players had a lot of detail. I kept switching back and forth between the sources, and I started to hear a kind of smoothness that made the 775 sound more natural.
I told the salesman: "I like the 775, but I don't think it's $80 better.." well he gave me something like $50 off retail for the 775, so I got it. No regrets.
Eventually I got the Axiom M22's because I knew the Yamaha had resolution that the Paradigms weren't revealing (easily demonstrated by going CD player-> headphones). I was right. I also got a Panasonic RP-82 DVD player. While this player sounds decent on DVD-audio discs, it is horrid with audio CDs. Horrid is relative; lets just say that it seemed to have more in common with my portable CD player than my Yamaha.
Bottom line: if you listen to a lot of CDs, an inexpensive, dedicated, well-made CD player will often match DVD players double the price. Ignorance is bliss, but here's the fruit of knowledge if you want it.
-Cooper
