Is my dealer lying to me?

I completely agree with Audiopath. You need to decide where you are going to take your system in the near future. It sounds like you will upgrade everything over the next year or so. If that's the case, you'll need to buy a CD player that fits your future system, not your current one. You probably won't hear significant differences between CD players in your current system. That will change when you have better amplification and speakers.

You also mentioned Arcam. I have the Diva CD92 and can tell you that it is an excellent player and much better than the Pioneer DVD player I was using previously. Spend a little more now so you won't have to upgrade again in a year or two.
Good Luck.

Celtic66 is absolutely right. I have experienced severe flak in this forum for saying that most audiophiles have a tremendous need to believe that $$$ = better sound 24/7. There are many "deals" out there in new equipment. Equipment whose price/performance ratio is outstanding on its own, but, and more to the point, that offer very high sound quality that should leave most everyone, except died in the wool upgraders, satisfied for years to come and that could leave time and money for recordings; which is what the whole thing is about in the first place. I will spare everyone the anecdotal evidence I can think of which tends to demonstrate that if an audiophile believes he/she is listening to a mega-priced component while in fact some lesser priced unit hidden somewhere inside a cabinet is playing, he/she will quite often wind up with egg on the face.

As I suspected, this topic is drawing debate, some of which -- inevitably -- focuses on the merits and demerits of DVD vs. CD players. I must humbly disagree with Natalie's commments, though she is certainly welcome to her opinion. Major Japanese manufacturers have been producing some excellent higher-end equipment for many years, and the Pioneer Elite line is certainly in that group.

I have been a serious audiophile since the mid-1960's, been a member of several audiophile clubs, and have twice supported myself professionally by selling high-end audio gear. That does not mean that my opinion is the final word, but it does mean that I've had a lot of opportunity to listen to and objectively compare a number of brands of CD and DVD players. A well-made, upper end (as opposed to high end) DVD player often has a heftier power supply than many CD players, and most of the DAC's used in both CD and DVD players are made by the same manufacturers (Motorola, etc.). Therefore, choosing a combined DVD/CD player not only makes fiscal sense for many buyers, but practical sense as well if you have limited dollars or limited space.

As I mentioned in my first post, I worked for some years for Spectra-Physics, one of the major laser manufacturers in the U.S. Lasers for DVD's and CD's are virtually a commodity today, as are DAC's and other processor chips. This isn't to say that there are no quality differences -- there are -- but pricing is based mainly on quantity, and as someone above noted, manufacturing costs are largely a function of volume. Hence, many of the boutique high-end companies that virtually hand-build their products -- but who still buy the component parts from the same manufacturers as high-volume builders -- cannot compete directly on price with larger electronics firms.

Ultimately, you should audition several units IN YOUR HOME -- both CD players and DVD/CD players -- and let your own ears decide. As Pbb noted in the preceding comment, don't fall for the high-end argument that more $$$ = better sound. Tain't necessarily so........

Whoa ... everyone calm down ! Sdcampbell is correct ... and Natalie may also be correct. In a system costing $5kUSD or less I think it would be hard to justify a $2k CD player as the remainder of the system probably could not resolve the differences. That is my situation (Densen amp, Spica Angelus speakers).

In a $20KUSD+ system I have no experience ... I suppose that it's possible that a $2k CD player might sound justifiably better than a $500 player ... I don't have any experience at this level.

That said I think it's important to note that Gunbunny doesn't appear to be assembling a megabuck system, and so, in that context a $500 Cambridge CD player (or any good $500 player) is probably a very sensible suggestion.

At this level it has been my experience that all components should be of approximately equal cost, and that money can most easily be saved on a judiciously chosen CD/DVD player, rather than a cheaper amp, or speakers.

Gunbunny ... please correct me if I have underestimated your budget/enthusiasm :-)

The following is my experience, and where I think more money makes the most difference

Most important -- good amp/preamp
Next -- good speakers
Next -- wire
Next -- cd player

If items 1, 2 & 3 are top-notch, you will notice the difference in item 4.

For me, high quality sound can be found if you spend 2K on electronics, 1500-2500 on speakers (less if used, and it's hard to get high quality for under a grand), 500+ on wire (but at least 250) and 500 on a cd player.

So the cd player is probably the best bang for the buck. I.e., you get a lot without spending a lot, while that is not the case with other components.