I'd put the bulk of the money into a good DIY amp. When you break down the labor costs, your money goes a lot further than it does with a DAC. DACs go through big changes every 1-2 years, so it doesn't make sense to put a lot of money there. If you'd like an example, go back about three years in the Source Forum. See how many of the "popular" DACs are still being talked about today. Amps go through trends, as well, but the fundamentals haven't changed in years. There might be a new chipset out in 18 months that will make today's best DAC obsolete. That just isn't going to happen with amps. Some of the very best sound comes from 1930s technology.
You should always drop cash on the stable components, like headphones, amps, speakers, and turntables. Technology moves a lot slower there, though I'm sure the marketers would scream me down for saying that. But it's true. You can put together a classic turntable with a McIntosh Amp and ESL-57s and get a sound not far from today's high end.
Also, you have many more opportunities to scrounge parts for an amp. If you read up on transformers, you'll see that you can reuse ones from old TV sets, test gear, or any number of sources. I'm sure your father will know where to go. There might even be a supply closet full of cast off goodies where he works. I think you're in the UK, right? You might want to check with the RSGB (
Radio Society of Great Britain) to see if they have any Hamfests/swapmeets in your area. A little money and a little haggling should get you plenty of transformers and valves.
Play your cards right and you can put together the equivalent of a $2,000-$3,000 amp with your budget along with some time and effort. It is my opinion that most sources are underrated. If you already have good headphones, you'll get better sound with a $50 DVD player and a good amp than you will with an expensive source and a cheap amp. If the amp isn't going to put your headphones in their best light, you're never going to hear the benefits of your source. That might seem like a chicken/egg problem, except for the fact that you get pretty good sound from cheap digital sources. There used to be a wide difference between sources, but no so much today.