I mention my own experience a few posts back:
http://www.head-fi.org/t/617241/audioquest-dragonfly-review-affordable-outstanding-tiny-dac-amp/1680#post_10246405
I thought it sounded good overall, but if the Q701 were my primary headphone (I sold them a few months ago...) I would look for other options to compare with. Not sure there is much better at this price point, but if it were me I would do some more shopping around... As I mentioned in my post above, I think it is perfectly fine as a temporary solution, and maybe beyond temporary if you don't find the Q701 to be a tad bright sounding as I do. For me, the Dragonfly was a most welcome upgrade from my laptop or phone headphone output. Everything sounded better, with better bass and a better soundstage. I think the amp section is what matters most with Q701, especially when you get to the level of DAC performance around the Dragonfly and above.
If it were me, I would not hesitate to start with the Dragonfly 1.2 and then maybe later upgrade to a Matrix M-Stage or something similar... but the problem is that the new Matrix M-Stage HPA-2 with USB DAC is getting really good feedback, and since you only pay another 30 or 40 dollars for the USB DAC version, the most efficient thing to do would be to suffer along with Q701 direct to consumer device and then just get the HPA-2 USB DAC when you can. Then if you really get into it, you can get a much more serious DAC like a Bifrost Uber or better and the HPA-2 amp section will still do it justice. No need to have the Dragonfly in the middle of all of that. This coming from someone who is a very very big fan of the Dragonfly, both versions...