Does an upgrade make sense?

With some rearrangement of furnishing etc in the room you may be able to create more of a long side and a short side. Place speakers so they fire along the long side of the room. Let the speakers breathe - have space on all sides, and work with exact toe-in and positioning. Next, consider a turntable and phono preamp. If you do need subs, consider four of them, just for the lowest bass, with less crossover problems (e g Audiokinesis Swarm). Personally I gave up on subs after some years with a Velodyne DD18, replacing two REL Strata, and others. I like better bass but not the solid-state and equalized type of sound.

You already know this but the sound stage depth will be limited by how far your speakers are from the wall.  Since you can't move them further away from the front wall  I suggest removing the TV and filling the space with a diffuser.  This will effectively "move the wall back" a bit.  Also, swapping the glass front pictures with something non-reflective will also help.  IMO this is the best upgrade you can make at this point.  Adding better/more expensive gear will have the benefits compromised by the room not being optimized.

I totally agree with the addition of a pair of subs.  Bass traps really help in a two channel system.  My soundstage became much cleaner after adding mine.  Good luck and cheers.

Chord DAC's are quite good and there are a few at various prices that should be fine for your budget range. 

Since you can't move them further away from the front wall  I suggest removing the TV and filling the space with a diffuser.  This will effectively "move the wall back" a bit.

If this isn’t possible you should at least throw a blanket over the TV when listening that’ll also help quite a bit and very simple/easy to do. 

@soix

+1 thick… wool.