CD player or DAC ??

Yes, find a used CAL Icon MKII ($400ish) or the MKII with the HDCD Power BOSS upgrade ($600ish) in top condition and save the rest of your money. They are older, but better sounding players, IMO, (though I have not listened to the new 2000, just the other two) and make good transports if you ever decide to go with a quality external DAC. The DAC in the stock MkII sounds much better (again, IMO) than the MSB III DAC as it has a more analog sound to it (smoother), with fuller bass. The upgraded MKII offers increased detail and slightly tighter bass which can be nice if you have an already warm sounding system. Add a $50 Absolute power cord and you will have a great musical sounding source for very little money. This is my suggestion, unless you are willing to spend more than $1K.

I swapped my Cal Icon Mk II recently. It was in great condition and is currently under cd players at Audioreview for $250.I also can vouch for Mike K. who is selling it, since I have bought a number of items from him with no problems.

http://www.upscaleaudio.com/ahcd.htm

Check out this Tube modified player, lots of excellent reviews and you will save almost 1/2 of your money.

I second and third the recommendations for the CAL Icon Mk II. Also, check out the Ah New Tjoeb! CD player for $579 NEW from Upscale Audio. Both these 1-box players are dynamite for the money, and the Icon can be had for under $400 used on Audiogon. Both players will obviate the need for any DAC upgrade, IMO.