Could you comment on whether the addition of the Pace Car is a subtle or significant improvement in the sound quality.
I think the answer to this question is system-dependent. With highly resolving components, the addition of the Pace Car results in significant improvements. With moderately resolving components, I believe the improvements would be more subtle. You can read more about my experiences with the Pace car in a review I wrote.
Also, will a better DAC also reduce jitter?
It depends on the dac. Some do, some don't. Keep in mind that the "gold standard" for jitter reduction is a FIFO buffer, which discards the timing data altogether and relclocks the audio data with a high precision clock. This is the approach in the Pace Car. Many dac's that advertise their jitter reduction capabilities do not use a FIFO buffer, but use some other approach.
I do not have the breath of experience to generalize about how much better a FIFO buffer is than other possible approaches. I can say that my Meridian G68 uses PLL's and ASRC to reduce jitter, and even with that, the addition of the Pace Car resulted in significant improvements. Again, this assumes a certain level of resolution among the rest of the system's components.
I don't know the OP's system, but since he has not yet added an external dac to his Sonos, I am now thinking that the Pace Car might be overkill for him. In that case, a more sensible option might be the Cullen mods in combination with a moderately priced dac, and a good S/PDIF cable between them.