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The Pure i20 is a good rec. It has a digital out if you want to use an external DAC and it has analog outs where it uses its own internal DAC which should certainly be better than the one in the iPod. All that for around 100. Never used that specific one but have heard good things about it.
I have 2 docks that I use. One is a Cambridge iD100, which is a Dock only and therefore have to use an external DAC (300). The other is an Arcam drDock which does what the i20 does but costs more. I don't know if its internal DAC is any better than the i20 and it's around 300 also.
The Pure i20 is a good rec. It has a digital out if you want to use an external DAC and it has analog outs where it uses its own internal DAC which should certainly be better than the one in the iPod. All that for around 100. Never used that specific one but have heard good things about it.
I have 2 docks that I use. One is a Cambridge iD100, which is a Dock only and therefore have to use an external DAC (300). The other is an Arcam drDock which does what the i20 does but costs more. I don't know if its internal DAC is any better than the i20 and it's around 300 also.