Do I need a Preamplifier

Bonigv - Bring the output on your MP3 volume up until you hear distortion (if you do). You're better off amplifying that output than getting all the excess noise by trying hard to amplify a smaller signal (volume turned down).
DO NOT use the phono input for two reasons.
First the gain in that input will be absurd, and you'll overload the amp input, distorting quickly.
Second, the phono input uses the RIAA equalization curve for vinyl, so your input to the amp section will really be screwed up with all kinds of EQ you don't want.

Snofun,

By amplifying you mean using a preamp before I feed into Receiver ?

Any comments on Boostaroo Portable Headphone Amplifier.

http://www.boostaroo.com/

Thanks
Boni

No - see the first two posts - you already have a preamp in your receiver. Bignerd did a good job of describing the combinations and permutations of receivers, amps, etc.
The preamp is where the signal goes in on your receiver, and the manipulation of the signal happens - tone controls, balance etc. That output is then fed to the amplifier.
What I'm trying to say is to turn up the signal from the MP3 player to the point just before distorting (if it does distort - it may not). Use the loudest signal from the MP3 to feed through the preamp and into the amp.
The reason for this is that you then have the loudest signal possible going into the preamp which means that you amplify the maximum amount of signal, and minimum amount of noise.
Good luck.

I understood what you are telling. That exactly is what my setup is currently. What I need to know is whether there is a device which can adjust the output of the headphone jack to a Line level input. That way, my receiver will not know the difference between input from headphone jack and any other line inputs.

Thanks
Boni

If you max out the volume on your MP3 player, and the maximum output voltage is 2.0 volts you are safe as long as you are not getting distortion. Read the manual for the player and the receiver. If the max output voltage of the MP3 plaer is 2V and the max input voltage for the receiver is 2V you are safe. The input and output impedances are an issue as well but with an MP3 player connected to solid state receiver I would not worry.

Perhaps moving away from MP3's and towards uncompressed music is a more important concern. With huge hard drives comming down in price and software getting better you can start saving music uncompressed and simply add a new hard drive every couple of years. Music servers are still not quite there yet though Cambridge Audio has one that appears to kick ass for $$$.

Good luck!