It is a usb to spdif converter and is designed to reduce jitter and it is asynchronous. Some people think those are really cool features and it enhances the SQ. I believe in as few boxes as possible. In any case, musical fidelity is coming out with a v dac II that does pretty much does what the v link + old v dac combo does for around $350 I believe. You can pick up the v dac now for $250 which is a good deal; I'd get one and not lose any sleep over the v link.
Without the V-Link you will get 16 bit from the V-Dac. With the V-Link added you`ll get 24 bit audio.
But as mentioned the V-Dac 2 is due out soon. And this will work out cheaper than buying both. If 24 bit audio is what you want?