MUSIC SERVER - HOW DO YOU............

Mac mini running pure music connected to a good external dac thru asynchronous USB or toslink will be as good as any standalone cd player, depending on the quality of dac you use.

If you want to go nas, get an apple extreme router and hook up a 2 TB drive to it and you can share the drive from any Mac or pc. Or what I do is have 2-2TB drives connected to my Mac mini so I backup my music every hour using time machine which is built into snow leopard. This takes 2 minutes to setup and automatic after that.

I also use MAX to rip cd's to the mini to get the highest bit rate.
I also use a glass to toslink cable and a very good quality USB cable which make a difference.

Sit back with your iPad/iPhone and control everything. Plus you can share and route this all thru your house.

I really like the squeezebox Duet or the new version I think is the Touch. It is really easy to set-up, operate and enjoy. It benefits from going into a DAC vs. using its internal DAC. It is inexpensive and allows for streaming wirelessly or wired full resolution. The remote is great and it overall is easy to work with.

Best of all, you don't need to be a computer wizard.

I think the Mac Mini is also great, though I cannot comment on the required computing skills. I like the Squeezebox because it is so easy. Even my 10 year old daughter loves it. Selection of music is much like an Ipod.

Since you already have the Dac my solution above is still your best bet. Also using an Empirical Off Ramp connected via Spdif to your Dac will outperform any USB Dac I have heard and I have heard many.

One of the Squeezebox devices, like the Touch, using SqueezeServer software (free) will allow you to use your FLAC files and ignore iTunes altogether. I agree on MacMini as a processor. You can use the Touch wireless or via ethernet cable (better). As has already been mentioned, it is a very easy interface to get up and running with. You will NOT need a USB/SPDIF convertor, or a even a USB DAC running this way. You'd connect your computer to the Touch via wireless or ethernet, and the Touch would be connected to your DAC via an RCA SPDIF digital cable. I use this route and the results are excellent. If you are really picky and want to tweak it out you can get an aftermarket external power supply for the Touch, like the one made by CIA, and or add a dejitter interface between Touch and DAC if your DAC has poor jitter specs (actually, I'm told the jitter coming from the Touch is pretty low). I can tell you that even bone stock it sounds damn good to me.

X2

Rbstehno has described the approach I use as well! I use toslink directly into my DAC. Sold my CD player 2 years ago. I still have a CD player in my car, but don't use that either! My 160 GB iPod has pretty fair share of my music on it! :-)