Best upgrade for the money ?

Might want to look at paradigm speakers (great bargains and I have seen several steals here on AG)and a power condition (just for the general protection and help in sound. made a great differnce- If you want a reasonable price, monster 3500 is fine - you can get for 1/2 of list on AG or eBay

I agree with almost all of the above suggestions, but no one has yet chimed in to say that one of the best upgardes you can do is to add phono. Get something like a Rega Planar 3 with a Grado or Sumiko Blue Point. It will KILL you Micromega. Even more than speaker placement, vibration isolation, and acoustic treatment of your room, adding vinyl will be a gestalt. You may have forgotten (or, perhaps more likely, never known) how good records are.

I've seen a lot of good advice here especially regarding roomtreatment and vibration control. After that's taken care of my guess is that either splitting off your pre-amp functions to a good unit - tube or solid state- will make a really big difference. If you're not ready for that step, then a speaker upgrade will also make a tremendous difference. I've had a Micromega stage 2 for 5 years and while It's not state of the art, my feeling is the gap is not as large as some would like you to believe. I swapped in the Meridan 508.20 recently, and while it was better, the change was minor compared to what adding my Audible Illusions pre-amp in place of my intergrated's pre(WOW). If your Sim is better than my Arcam 9 was, then I'd start with the speakers.

Speakers are the most important piece in a system. I don't want to run Polk down they are pretty much entry level. i would sell them and try as you are trying to keep the price down I would listen to either the PSB Stratus Gold of some of the Vandersteen (spelling) product. They cost a little more than what you have in mind but it would be worth it. Don't throw good money after bad! Good luck!

The $1.20 Tweak. God knows if it works or not,But my mind thinks it does. And that is what counts.