Upgrade my CD player or buy a DAC?


I cannot decide wether I would be better off buying a dedicated CD player or a DAC and use my current player as a Transport. I am currently using a Yamaha BD-S2900 as my CD/DVD player. I use my system almost exclusively for 2-channel audio, mostly Folk, Rock, and Jazz. My current setup:

Vandersteen 2CE Sigs
McCormack RLD-1 Preamp
Sunfire 5x200 running Biamp
Yamaha BDS-2900
Apple G5 for digital music
Audioquest King Cobra Interconnects
Audioquest Type-8 Speaker Wire

I have a budget of up to $600, let me know if you have any advice.
nickryder
Thanks for all the input! I was leaning towards a DAC and I have heard good things about the Benchmark DAC1. Are there any other DAC's you would recommend? The Musichall 25.3 also caught my eye.
The Benchmark DAC, which I have auditioned a fair number of times, has a large
following for good reason: it digs out detail like no other I have heard. It is
impressive and you may love it. My own preference ultimately went to a DAC
which I felt provided detail, yes, but also a special sense of the overall flow of the
music. Both the trees _and_ the forest: I hope I may use the analogy without
appearing to denigrate the Benchmark, which I repeat is an extraordinary DAC. It
may be just right for you.
the benchmark was way too cool sounding to me, almost fatiguing. i have a music hall in second system that has an upgraded tube and i prefer that over the benchmark. the wyred 4 sound dacs are much better sounding that both these units IMO. i thought it equaled if not bettered the ayre dac which is a great dac but limited in input.
Another option is to consider a modified player that has a good 24 or 32 bit dac in place. There are many that come up on this site. IMHO, it does come down to cost vs benefits. I Had a M-1 Musical Fidelity DAC($700)that blew me away till I heard what a 32 bit DAC can do.
Isn't a cd player just a transport with a built in dac.If so keep the cd player and just get a better dac.