CD Player versu Dedicated Transport

So I have to ask this question. Would you spend more money on a transport or a DAC. I have heard some opinions that would say both are important, some would say that you could get any "cheap" transport and use the digital out to a good DAC. Of course some would say that that is non-sence. However, I would like to hear some opinions on this subject. I am wondering because I have recently started to build a system and my next step is either buying a good cdp or a DAC. I have a sony 400 disc jukebox player with a digital out. Obviously not up to audiophile quality, but I do love the convience. I would like to hear what others think I should buy next, a cdp or a DAC.

arc cd3 are commonly used for transports (this is a great setup with the AL dac).

however, changing your digital ic cable might surprise you. i am using a dh digital cable in the meanime while i am looking for "the right one". it is a great cable for the money but lacks the ulimate resolution and bass slam with this level of gear. it's best to avoid adapters on this connection and keep the length to a minimum of 1.5 meters.

also suspending your cable should offer sonic improvement

I would assume that using CD3 as a transport is a good idea since it has a very nice transport.

My recommendation for a digital cable would be Virtual Dynamics NiteII(very smooth, well balanced cable) or Master(very lively, lots of dynamic drive, smooth, but superb detail - overall an amazing digital cable and beleive it or not, a big improvement over NiteII). The cable you are using currently is not even close to the ones I just mentioned. NiteII and Master are in their own league.

But let me ask you, Pubul57, have you tried the CD3MkII running it with balanced interconnects into your pre-amp? If you haven't, you're in for a big surprise. At least in my system this was a huge jump in performace. I am wondering if you tried that. This player sounds completely different when run balanced.

Audphile1, I have not tried the ARC CD in balanced mode. The DAC is single-ended, and my CAT pre is as well. For reasons I don't quite understand, I've heard that in the case of the 24MXL DAC it sounds "better" in single-ended (they do make a balanced version).

Pubul57, I guess that's the only option then.
In any case, is there a big difference between the CD3 and the dac?