Right now my music source is mostly CD-quality digital streams from our FIOS service. I know, not the ultimate, but it sounds pretty good to my ears. Also, I plan on either getting a Squeezebox, or letting my Panasonic TV stream 192kbps Pandora to my system. Would also like to be able to stream lossless files from my PC.
At some point we'll be getting a Blu Ray player, and I was planning on getting an Oppo, so that would be my CD source as well.
$700 budget would be for each component, but I'd probably have to wait a while (6 months?) between purchases (wife acceptance factor, not cash-strapped factor, lol). I could probably stretch a bit more for a really good component if I could be convinced that I'd actually be able to tell a decent increase in SQ. (when taking into account my other equipment, my non-treated room (is 13.5x33x7 though), and me not being a trained listener)
I suppose a frame of reference would be when I went from the Carver receiver powering my B&W 601's to using the Carver as a preamp and using the Adcom 545 as a power amp. There was a large increase in the lower end and bass response, not trivial in the least, even my wife could easily tell the difference.
Then, when I moved up to the Ascend Sierra-1's, there was another definitely noticeable increase in SQ. More bass, much tighter and better defined also. More extension and not boomy anymore. More "air" and seperation between instruments and sounds in music as well. Lyrics, etc become more clear.
I'd really like to get another increase in SQ on par with that I got from those 2 changes, if I can.
Mike