Should Speakers come first in a gradual upgrade?


I got info hi-fi audio about a year ago, and I have what I consider a pretty balanced relatively low cost system (high cost for me because I'm just an airman in the Air Force): Monitor Audio 5i speakers, Audio Refinement Complete Amp, and Cambridge Audio D500 CD Player. Conneting it all together are a Transparent Audio Super RCA interconnect, Transparent MusicWave speaker cable/jumpers, and stock powercords. I have a budget of $1000-$1500 (plus whatever I can sell the stuff I'm replacing) to upgrade my system. I'm very happy with its basic sound now, though I'm looking to get smoother highs, a little more detail, as much of a 3d soundstage as I can, and more solid low end. With that in mind, I'm thinking of going to a mini-monitor/sub system. I'm wanting to spend all my budget on upgrading just one component to the highest quality I can afford now, and I'll upgrade the rest when I can (it'll probably be an 8-12 month wait before I can do another upgrade). The question is, is that a smart way to go, and if so, what component should I upgrade first? I've thought about replacing the CD-player with an Arcam 92. But then I've been thinking that getting a Cambridge Audio S700 DAC (includes HDCD decoder) w/ Transparent's premium digital cable may give me a sound equal/better/close to a $1500 player at a lower cost. I'm pretty happy with the sound of the Audio Refinement amp, so I'm not planning on replacing that anytime soon, plus I think upgrading the amp will have the smallest effect on getting the sound I'm looking for, as opposed to upgrading the speakers or CD player or adding a sub-woofer (am I right here?). As for speakers, I want to replace the 5i's with a premium mimi-monitor, and one that has caught my eye is the Eggleston Works Isabel. I think it has fantastic looks, and it has the dynaudio esotar tweeter which should give me the highs/detail/sound stage I'm looking for. I'm concerned though that the Audio Refinement amp will not adequately power the Isabels (the amp is rated at a very solid 50watts). Any other monitor suggestions? It seems like the Dynaudio 1.3's keep coming up, however, I don't have a way of auditioning them, and the Isabel seems to be made to a slightly higher quality and with higher quality parts (esotar tweeter, hovland musicaps, vishay resistors, cardas rhodium posts, etc). Finally, I plan on getting a REL Strata III subwoofer, with plans to get a second one down the road. I don't want to get the subwoofer now, because I think the bass in the 5i's are fine, though lacking in weight and extension. Plus, I'd rather get the better highs/detail/soundstage now, and wait on the bass. My ultimate goal is to build a great sounding system with the afore mentioned qualities for 8-10k, and I'm hoping that whatever component I get now will be a part of that 8-10k system. So I'm left wondering what should I upgrade first? What will make the biggest difference now? And what should come next? Thanks in advance for helping me out. Oh, my music tastes are diverse...some of my favorite tunes come from Sting, Cat Stevens, Itzhak Perlman, Peter Gabriel, Beethoven, Andreas Vollenweider, Stevie Ray Vaughn, and Led Zeppelin.

Thanks,
Gil

p.s. Any other military audiophiles out there?...I haven't met any yet...it's hard to explain to your fellow soldiers why you aren't crazy for wanting a 10k stereo that doesn't even have "surround sound".
poor_airman
Another source first guy. If you're considering the Arcam 92 you might also want to try out the Linn Genki. Make the REL your very next step though! I don't care what anybody says, every pair of speakers needs a REL.
Thanks for all the suggestions. They confirmed my suspicion that the speaker upgrade should wait in favor of either a better source or sub. I'm still not quite sure what to get. I'll audition some DACs to see how I like the difference. An idea I'm leaning towards is to get a cheap powercord upgrade for the CDP (~ $100), and the cambridge audio DAC, which my dealer w/ sell me for ~$400 (demo unit). That'll leave me enough left over to pick up a used REL. The DAC will have to be upgraded again, but should give me a decent improvement in the mean time. Plus I'll have all the benefits of the sub. Grandpad, why should I defintely get the Storm over the Strata? I'm planning on eventually getting a pair of subwoofers (not for the extra bass, but because of all the other sonic benefits forum members have noted when adding a second sub), so I was going to go for the cheaper Strata. I could care less about bass quantity, I just want quality and enough extension and weight to make pipe organs and such sound realistic. Dweller, I haven't heard of the musicians you mentioned, but I'll definately give them a try. Dburdick, nice to see that the 5i's are so receptive to better equipment. Be sure to tell me how those WBTs sound, because I was thinking about doing an upgrade to the binding posts in both the amp and speakers. I'll also try filling the speakers w/ leadshot (they're filled w/ sand now). Tim, I'll try to get in touch w/ Pete...too bad his wife put the foot down on his hobby. Thank God my wife tolerates it, and listens to the system daily with her own CD's. She even suggested that I should do an upgrade if the government follows through on its proposed 10 day tax free holiday shopping period (I didn't tell her I was already planning to do an upgrade regardless...).

Thanks for all the help.
Gil
Hi Tim, I'm sneaking in. As for the wife, she only has taken my budget away cause of my restoration on my truck and she wants another house. But eventually I will do another upgrade. Looking at the vandersteen 2wq(used sub). The sub I really would like to have is the kinergenics sw800, so anyone out there looking to support your troops; give me a deal on that sw800. Hi Gil, glad to see that I'm not the only USAF audio head out here. I agree w/the above mentioned, if you buy a good sub it will open up your mids/highs, giving your amp some breathing room. You are wrong about the amp thou, I upgrade 3 times on the amp and finally settled with the bak vk200(used $1,600). Each amp upgrade just got better and the vk200 is here to stay. My vk200 gave me the mids/highs/lows I was looking for. As far as cables, I'm very happy with the transparent thru out the system. Speakers are Martin logans aerius i, so the transparents worked nicely for me. As far as power cables go(if your a little handy, make your own) I audition an $800 power cord at home and took it apart. I can make the same power cord for about $50. Good luck, Pete
Tim - in my audition the Storm sounded more musical than the Strata, small diff but noticable. If possible try to listen to them both to see if the Storm is worth the extra expense in your application.

Good luck.