Do I really need a Dac?

It all depends on the quality and resolovong power of the rest of your system.
The weakest link is the part that matters.
I still use old Sony ES changers for my CD transports.
I do use a DAC. but it is an older one. My SCD777ES onredbook CDs actually does sound very slightly better than my DAC, and this only after a lot of tweaking of my system (Bryston BP-26 4B-SST2 and Magnepan 3.6 speakers)
The bit which made a real difference for my CD playback was adding an expensive tube pre used as a glorified tube buffer.(VAC Standard used $1,500)
For my setup, it was the right choice.

Generally buzzword wisdom has little value except for folks who have no clue what to do next.
Dacs are 'hot' right now, and have a great deal of 'buzz'. Since dozens of new models are popping up all the time. Someone has to sell them.. Thus the marketing of DACs.
IMO a DAC is not going to do much for you if your system is average.

Here is a 6 year old post from Audio Asylum that addresses your question:

"I use the single disc X555 as my reference player and the 5 disc 801 for just random playing around. The internal DAC's on both are fairly decent, but I use them through a SDP-9ES external DAC. the DAC in the SDP-9 is over 10 years newer and has much more detail than the aging internal ones.
Both have excellent CD tracking that will put most others to shame."

I think that DACs and cd players have improved substantially in the last 20 years and that you should be able to find something that makes a worthwhile upgrade in the changer.

NO you don't need a DAC. In my audio club almost no one had one and they were not missed.

A good DAC would probably beat your CDP, but you also need a good 1.5m S/PDIF cable from Transport to DAC. And BTW, your transport will need to be replaced or improved. The jitter on older transports is really high. I have modded quite a few of them over the last 12 years.

You are looking at probably $1500 for the DAC (Wired for Sound DAC2), $4000.00 for a good transport or instead your old transport and a $600 reclocker and finally $500+ for a good 1.5m S/PDIF coax cable. You can do it for about $2700.00

This will transform your system. The source, particularly the digital source is the most important thing next to your speakers.

Steve N.
Empirical Audio

No you don't. DAC's are just in the middle of their 15 minutes of fame. It will pass.