What should be the first component when upgrading?


I currently have this terrible system:

-Infinity SM 62 Bookshelves (on stands)
-Sherwood RX-4105 Receiver
-Source is Apple Powerbook (iTunes) or iPod

This summer I bought Grados SR80 headphones and they simply BLEW my mind. I heard things in my music which I've NEVER heard before (and this is with MP3's!). I listened to practically every song over again because of this increased resolution.

So naturally I wish to upgrade my above system. I've been researching the last few months and have come up with a couple of options:

-Epos ELS-3/Wharfedale Diamond 9.1/PSB Image B25 speakers
-Cambridge Audio 540a v2.0/NAD C320BEE/used Marantz/etc. integrated
-Hsu research VTF-2/STF-1/STF-2
-Standalone CD player (cambridge audio 540c?)/NAD ...

I just found a VTF-2 on here for 275 which seems like an awesome deal. Just wondering which component you guys would replace and in what order?

I was thinking of getting the sub first because I could use it with my existing system and then upgrade the other components in this order (integrated amp, speakers, cd player) ....

But after reading some more on the forums, maybe I should keep my existing system and upgrade the cd player first (garbage in= garbage out) ...

Or maybe I should get the integrated amp first?

Seriously seeking guidance in building this budget system as this will be my fisrt foray into budget hi-fi .... what would you guys do??
bobcuzi
Another vote for speakers. Get the best you can afford and work your way up from there.
It doesn't matter. The whole chain will only be as strong as the weakest link. If you have a preferred affinity for a particular component (i.e. "I really want to try a SET tube amp" or "I've always wanted to try some Magnepan speakers, etc.) then start with that component and then build around that.
Wow,

Lots of advice and opinions. Ok here it goes http://www.slimdevices.com/pi_squeezebox.html at $249.00 either connected to your powerbook via ethernet or wireless is the way to go for your front end. End of discussion the analogue out far surpasses the Roku. It will play apple lossless and your existing MP3 files as well as WAV. Forget the integrated for now and upgrade the speakers. I would go with a pair of used Dynaudio Audience 42 if you can find them.

My desk system at work is as follows.
Denon CD Rreceiver UD-M31
Dynaudio Audience 42.

This is a great little system that puts me in the speakers are the most important camp.

Good Luck in your search.
I agree with the source. Improving the speaker is fine, but keep in mind the speaker can only reproduce the signal it's being sent. Improve the signal, you improve the sound....everytime. If the source, pre-amp, amp is the problem, changing to a better speaker will merely more clearly reveal the faults of the source, pre or amplifier, making the system sound worse. I seen that happen time after time as a retail audio salesman. Source first. PS: In my opinion, the reason the Grado headphones sounded so good is they are virtually void of phase shift, which most speakers have tons of.
How does one judge the sound quality of a source component without speakers/amp that will resolve the info being fed? Without headphones and an excellent headphone amp it's not possible. One can select a source component known to be resolving based on reviews and user opinions, but it's not possible to judge the component's sonics or compare them against other source components.

Catch 22.