Having owned both the DAC1 and DAC2 I wouldn't call it an upgrade exactly but rather a slight change in presentation. IMO: The DAC2 is a slightly kinder gentler version of the DAC1 but the 2 loses a few of the 1s strengths.
Some might prefer the 1 while others might prefer the 2. Your system could also influence a preference. For me it was a toss-up.
Sorry I don't know the technical details of the differences.