Get a new CD player or external DAC?

A great standalone DAC, and more musical to my ear than the Benchmark, is the Apogee Mini-DAC. However you can't get it new with USB any more, you have to go FireWire. If you want USB you have to find it used.

One more thing: the quality of your transport and cable is very important. If you get a DAC worth $1500, you will need a good digital cable (at least a VH Audio cryo Pulsar 1.5m long) and then, your Cambridge player will show what made it an entry-level buy. I wouldn't count on being happy with that combination for long.

If you decide to upgrade your CD player, the best one I know at your price (for a new unit) is the JAS Audio Musik 1.2.

I struggled with the same issue and went with the Benchmark DAC1 USB (rest of system is Krell 400xi, Totem Forest, Apple Lossless running on HP PC). Very pleased with it and have no plans to add a CD in the future. My wife also likes that she can run Pandora easily through the system.

Check out the TADAC by Tube Audio Designs.
Qualifier: I have no association with them/TAD other than being a satisfied user of their product.
Good Listening!

Thanks for all response, your recommendation will be further studied for consideration. I forgot to mention my music taste is towards musical, warm rather detail and analytical.

@Chewy - CA 840C is in my first priority list as it serves as CD player + external DAC (with its digital input).

@Mimberman - Though i have ripped all my CDs into lossless files, i still listen to my CDs occassionally, in term of ratio between SB3 and CA 540C, it's approximately 60 : 40.

@Dokosan - Benchmark DAC1 USB is my first choice of external DAC, is it more musical, warm produced by your system after adding Benchmark DAC1 USB? What is the different between Benchmark DAC1 USB and Benchmark DAC1 Pre? The obvious i can see, the latter provides more digital inputs.

@Tobias - Noted, digital cable (coaxial or toslink) is crucial. What about analog cable (analog output from external DAC to amplifier)? Krell KAV-400xi provides balanced analog input (XLR/AES).

Auronthas - You're correct that the DAC Pre adds analog inputs; that's the only difference. I am running DAC 1 in balanced mode into the 400xi. My understanding is that balanced is the preferred choice but I can't give you the technical explanation other than the gain is slighly higher.

I would not say that introduction of the DAC 1 warmed up the system. This DAC is noted for being very detailed and accurate which is what I was seeking. If you are looking for a warmer sound you may want to consider some of the tube dacs (wavelength brick is in the same price range). There seem to be a lot of new USB dacs coming to the market such as Musical Fidelity and Cambridge.

If you make the move to a DAC, you may find yourself never handling a CD again other than to put in your car (unless you have a car with an ipod jack). It is extremely convenient.