Squeezebox does have an internal DAC, but IMHO the best results can be had by using an external DAC. Squeezebox has both coax and optical digital out, so you can feed the digital signal to your own DAC. I'm using a Benchmark DAC1 right now with excellent results.
I think Apple Airport Express is a bit cheaper, but I have not used it and can't comment on it.
I think Apple Airport Express is a bit cheaper, but I have not used it and can't comment on it.