please recommend..... the best sounding DIY USB DAC......

I would probably go with one of Cobaltmute's designs, they seem pretty popular

and I know they are small. I only have his SkeletonDAC so I can't comment

on the sound of the others, but the SkeletonDAC works well.

Do you have a budget?  The TOTALDAC looks absolutely terrific, if you like NOS options (and have a REALLY fat wallet)

I have a GrubDAC. Tiny DAC with a great sound. When a small size is wanted it's hard to beat. Just like the SkeletonDAC they both share the same PCB size: only 1" x 2".

Also worth checking out -- AMB y1

Well, basically any DAC can be made to accept USB with the variety of USB to S/PDIF and I2S converters out there, so it would really help to set a budget, size limits, battery vs USB vs wall power requirements, balanced or unbalanced outputs. :)

Not a lot of options at that budget/size - GrubDAC is a nice option, or maybe you can fit a Gamma1 :)

ackolabs AKD-22P or AKD-26 integrated hiface oem async asb module with es9023 dac and rca outs, or es9016 with balanced outs. both with integrated mcu plus IV and/or voltage follower output stage. 

Like the OP I'm also interested in a DIY DAC to replace my current DAC, an E-mu 0404 USB connected to either a laptop or desktop PC running foobar/ASIO and mostly FLAC.    I'd given some thought to the y1/y2 and GrubDAC and will be looking into the SkeletonDAC based on the feedback here.  Would any of these DACs (or perhaps some/one in particular) be a substantial improvement over the DAC I have now?  I'd really like to try a DIY DAC, but preferably before I invest a number of hours and funds into the build, I'd like to know I'll end up with more than just a slight improvement (or worse yet just equal/parallel performance) over what I have already, else I'll just buy a commercial DAC I believe from my experience to be better than mine such as a PS Audio Digital Link III or something else in that range.  Any thoughts on this? 

Incidentally, my future DAC will for the most part be used with a CTH (Cavalli Tube Hybrid) DIY amp and Fostex T50RP (Smeggy-built) Thunderpants, if that makes advice on my situation any easier to provide. 

Many thanks!