I am also considering buying a DAC.
I have a DVD player in the front of my Renault Espace with an optical out and analogue RCA connections, the amp which is in the boot only has an analogue aux input. I have tried connecting using an analogue connection but the sound quality is not great and interference is a problem, I am now considering a 5 meter fibre optic cable hence the need for the DAC.
I am considering these as they are small enough to install in the vehicle and relatively inexpensive.
Does anybody have an experience/opinion on these>
http://www.homehifi.co.uk/products/TC-7500.htm http://www.amabilidade2002.com/toslink.htm