DAC/DVD player or iMac/Sqeezebox?

Which configuration would yield better results: buying a DAC to use in conjunction with my DVD player or running my iMac to a Squeezebox? If you feel the DAC is the better option can you recommend one for around $300 new or used. I'm only allowing myself $300 for an upgrade to my digital front end since that's how much a Squeezebox is.
From a strictly audio standpoint, it's tough to say because we'd need to know the quality of the analog audio outs on your DVD player to compare it to the Squeezebox. But I can say that the convenience factor involved in computer audio is worth quite a bit.

I'd be willing to bed that the Squeezebox would at least sound about as good as the DVD player, and would also offer more functionality.

I would be using the digital out, so bypassing the analog outs and the internal DAC.