Looking for a DAC for the Squeezebox Touch

First thing you should do is get an upgraded power supply and then get Wayne at Bolder Cable to do a digital output mod on your Touch, then worry about which DAC to buy. The Wyred 4 Sound DACS are pretty good from what I have heard. I am using an Antelope audio Zodiac+ which I feel is even better but its more money ($2K used).

The most appealling thing about the SBT was the quality for the price. My search for the better began with using a Cambridge DAC magic-no significant improvement. Using a better power supply made sense (after consulting a friend who knows more about this stuff than me). I chose the Welborne power supply as it was less $ than the Bolder. The next step was more difficult as it ran against my grain to spend loads of $ on a device prized for the above stated reason. I wound up with the Burson HA-160 DAC as the price was proportional to the SBT and I'm very happy with the result. I do wish the DAC had more inputs though.

I run the W4S DAC2 with my SBT with great results...

From your responses it appears the power supply is the way to start. I'll look into both the Welborne and the Bolder for prices. I know DACs sound different and I guess it depends on my taste in sound quality. I looking for a DAC that will have a tight bass response and smooth highs. I listen to variety of music from jazz, classical and rock. Most often rock recording aren't that great especially on CDs. I'm not sure if a DAC will help the sound quality on these recordings.

FWIW, I'm also looking for a DAC to pair with my Touch, and my top list includes W4S DAC2, Bryston BDA-1, and possibly Burson DA-160 (to be released soon). All three have discrete analog sections. A couple forum members tried the DAC2 and BDA1 in their systems and preferred the BDA1. A used BDA1 sells for about $1600, close to DAC2.
Hopefully Burson's DAC is a good contender.

Also, have you checked Soundchekk's toolbox to improve on the Touch's sound? These are mostly software options you can set up yourself: will cost you nothing, and is likely to improve sound.