I have a Benchmark DAC1-usb. I haven't compared it side-by-side with a Wadia though.
In my opinion, the Benchmark is a LOT more natural-sounding than the Krell DACs though, and a very similar in sound to the PS Audio DAC. From what I remember about Wadia units, they tend to sound really nice--much warmer and "real" sounding than Krell and a million times more resolution than McIntosh.
Doesn't that Wadia have digital inputs? Yo should run the iPod and Squeezebox through that. I don't know if the Benchmark would be an "upgrade", but it might sound "different".
Another advantage to the Benchmark is that it has a LOT of inputs, and can allow you to hook up a lot of different components to it. It also has RCA and XLR analogue outputs, and if yr preamp has XLRs, I'd highly recommend using the XLR outs on the Benchmark--it makes a HUGE difference--tons more open-ness and air, and the soundstage is much more 3-dimensional.
--Richard