Can a simple DIY volume knob replace a pre-amp?

You can get a brand new Luminous Axiom for $125 brand new. I had one and it was a really good preamp. I had an Audio Research SP9 preamp...the Axiom stomped all over it.

It comes with your choice of XLR and RCA

I believe they have a money back guarrantee.

http://www.luminousaudio.com/axiom.html

There are 3 basic analog volume controls.

Potentiometers are the least expensive but capacitance and inductance can affect the sound. There are some well regarded brands such as Alps.

Attenuators use individual resistors and can be anything from simple rotary (step or ladder) to remote and semiconductor controlled (usually not for DIY). These are usually better than pots but can be difficult and expensive to assemble. The exception might be DACT units. The main drawbacks of resistance based units is reducing dynamics at lower settings and the requirement for low output impedance of the source. Placette is highly regarded due to high quality parts. The upside of passive "preamps" is incredible transparency.

The third and newest alternative is transformer volume controls (TVC). The Electraprint is the least expensive I've seen. Congratulations, if it works. There's also Sowter(IAG) or S&B (Bent Audio). These also require equipment matching but there is no loss in dynamics. I built one, as an experiment, for less than $1000 and it blew my reference quality tube preamp right off the rack. The other nice thing about TVC's is that they are completely indifferent between balanced and single-ended (autoformers excluded).

Of course, there's always Aunt Corey's but the BUF-03 has been discontinued.
http://www.stereophile.com/amplificationreviews/54/index1.html

So why do most of us have preamps? Are volume nobs better?

I also can recommend the Endler Attenuators. I bought a pair, and they're as good as anything else.

Of course, I'm not much fond of preamps for line level sources, so anytime I can run CD direct, I take advantage of it.

As a relative newcomer to TVCs (transformer volume control), and having recently acquired the Bent Audio NOH (silver transformer)I can unreservedly endorse all that Ngjockey has said in the above post. As an audiophile once remarked, it is "insultingly neutral". There is absolutely no loss in dynamics. The realism of brass, strings and subtle details is absolutely unbelievable. Voices are so life-like, I have found it very easy to actually hear singers articulate the lyrics to songs so much easier. Dan Fogelberg's "River of Souls" (track 3 - The Minstrel) has a passage with percussion (sounds like pins tapping on cymbals) that has hitherto been eluded by my other active preamps (high end I might add)but it shone with the Bent NOH.Ross Mantle of Ultra Audio wrote a seminal article in June 2003 with the provocative title, "Quick everyone, Sell your Preamps", extolling the virtues of the AVTAC Pasiphae preamp which uses Stevens & Billington's TVC. More recently, 6Moons and other audio journals are showing renewed interest in TVCs. Audio Zone's PRET-1, Music First's Magnetic passives and Bent Audio's NOH TVCs - no doubt many more will follow - shows that there is a better alternative to active preamps and might perhaps foretell that the future of preamps is to have no preamps but a TVC - no extra power cord, no resistors in its path. Can you imagine the future of an integrated amplifier with a TVC? Don't get me wrong: I am not saying TVCs are for everyone! it requires careful matching of source output and amplifier input, but if you can handle the absolute TRUTH there is nothing that can bring you closer to the honest truth than TVCs.