I heard a superb computer-based headphone system over the Thanksgiving break at my cousin's house. My cousin uses a humble 250GB Dell laptop as a dedicated music server, employing the very nicely designed Windows Media Player/Media Center operating system as his server architecture, with all CD downloads encoded as lossless files. The music files (roughly 550 CDs) are backed-up on a $60/500 GB external hardrive. Windows Media Center is configured to run at 24/192.
The hard-drive stored files are routed to a superb USB DAC, the widely celebrated HRT Music Streamer II ($149.00), an asynchronous device that slaves the digital data stream from the Dell hard drive to the DAC's internal clock, greatly reducing jitter. His headphone amp is a beautifully built Citypulse DAC DA7, a Chinese headphone/DAC combo available in a couple of iterations from Augio Magus.com. Headphones are the celebrated but now discontinued Sennheiser 580s. I don't know what USB cable he uses, but the interconnect running from the HRT DAC to the Citypulse amp is from Audioquest.
The sound, at least to my ears, was a revelation, coherent, full of detail, dynamically brisk, and also a touch dry. While I won't say that the sound I heard rivalled a mega-buck CD playback system, what greatly impressed me was the perceived increase in musical flow and naturalness. Everything just sounded incredibly coherent, as if cut from single cloth so to speak. I didn't have to struggle to hear deep into the recordings (a deftly assemble collection of classical, jazz and pop classics).
Ease of system operation proved another plus. I had nearly instant access to his stored library of 500+ CDs, but without the worry of loading and unloading disc drawers, or discovering that I have a stack of empty jewel boxes with the CDs nowhere in sight, likely double-stuffed in some jewel box I will never open again.
In my mind, this is the future of our hobby, at least for digital files.
I am now putting together my own headphone-based system, albeit one that will feature tubes in the electronics. I will report my findings soon.