Here's 30 years of perspective on moving coil step-up transformers vs. active preamplification: Neither approach to scaling up the signal from a low-output moving coil cartridge has conclusively defeated the other. The theoretical shortcomings of transformers are well-known and cited in a post above, but that doesn't mean a transformer might not sound preferable to you. It's true that back in the 70s, when all preamps had mm phono sections, generally transformers were preferable to the solid state pre-preamps of the day. The Levinson JC-1 was the primary transistor contender to take seriously. I'd say the period from about 1975 - 1985 saw transformers rule. This was the era of the excellent Mitch Cotter, Koetsu, Audio Interface, etc. xformers. A Koetsu was $1000 circa 1980 -- real money then.
When CD drove phono stages out of preamps and the market became dominated by linestages, engineering and resources directed into stand-alone phono sections yielded phono preamps that cost more than conventional phono + line preamps of just a few years before. The raw devices and power supply techniques improved to, so we got tighter, quieter tube phone stages, and considerably more musical solid state alternatives. Over the past 30 years, I have gone both ways on this. I've had Cotter, Denon, Ortofon, Koetsu, AI, Quicksilver and EAR step-up transformers. They were all euphonic and had very specific sonic signatures and this crowd did not generally roll off in the frequency extremes in a musically-intrusive manner, but they certainly weren't perfect. I've also used low-output moving coils directly into standard phone sections of preamps that were connected to high-input sensitivity power amps, yielding enough gain to avoid both a transformer and an additional active step-up, and this in many ways yielded the best results. You could do this in the analog days because tuners and tape decks had output level controls for level matching across sources. This worked because most American amps had ~1.5v input sensitivity so American preamps were spec'd at about 2 - 3v output at rated distortion. Most British/Euro power amps (e.g. Quad) had 0.5v input sensitivity and their preamps were rated for less than 1v output at rated distortion. So you could run a MC cart directly into an American preamp feeding a British amp and get adequate volume. Moreover, despite the specs, many MC carts of the day sounded better running directly into a MM input with the standard 47kohm impedance. Of course, you had to find the right pre/power combination to your liking.
Today, both the tube and solid state independent phono stages are better. There are excellent, musical silicon phono stages from Bel Canto, Trichord Research, Graham Slee, Sutherland, and many others, that won't bankrupt you. I've given up my transformer/tube phono setup recently because a move and some system changes made it impossible to get acceptable noise levels in any practical physical placement of the components. So I am using a Bel Canto Phono 1 driven by a Denon DL 103D, 60db total gain from the Bel Canto, and it's excellent. On balance, I have to say at the current state of development, it is better to go without a transformer and shop for a phono stage that can deliver sufficient clean, musical, tonally satisfying gain.
Keep in mind, phono is comprised of nothing but compromises. Low output moving coil cartridges are compromises themselves. A Shure V15 is and long has been measurably much more accurate from a frequency distribution perspective and of course delivering a much more usable signal, is easier to process. But moving coils have a character that belies the specs and once you find the right one, it's hard to go back to the MM sound.
You really have to consider the total amplification / gain chain to make optimal choices. But on balance, good transformers are quite expensive and if you put that money into a better phono section you can end up with less noise, more consistent performance, improved transient impact and generally more convincing fidelity, but some of the euphonic candy that comes with transformers will be missing.
Phil
