I've had the uDAC-2 long enough now to be able to review it with some confidence. Let's give it a shot.
Preamble: It's $129, well into impulse buy territory for most audiophiles. All you need to know is whether it does what it's supposed to (it does) and whether it sounds decent (it does)... the rest is petty details. However if you want the nitty gritty, read on.
For $129, it justifies itself on functionality of a 24bit 96kHz capable USB-spdif converter alone. Every thing else is a bonus.
The line out is more correctly a preamp out, as the output level is adjusted by the volume control. It's not a USB DAC, but rather a USB DAC+preamp. This could be a feature or an annoyance depending on what you propose to use the line out for.
Finally there is the headphone amplifier, which automatically switches off the preamp output when a headphone is plugged into the socket. This switching could again be considered a feature or an annoyance.
If you stick to using it as as the volume control in minimalist PC sound system, either with headphones or external power amp and speakers, the way it's configured is intuitive and straightforward.
When the uDac is plugged into a Windows PC the OS automatically detects the device and routes the audio to it, turning off the default audio device. So it is "plug and listen", zero hassle.
Perhaps though it is "peace of mind" that is the most useful feature of the uDac-2: With this tiny little box you are guaranteed a consistent audio experience, regardless of whatever computer you happen to be using. For me this counts for a lot.
Case studies.
Case 1. Denon AH-C260 IEH (16 ohms, ~$40), uDac-2 vs. Realtek ALC272 HDaudio codec (Samsung n310 netbook)
I wanted to begin this by concluding that with inexpensive headphones like these low end Denons there really want any audible difference - but the fact of the matter is that music sounded more realistic and was far more enjoyable through the uDac. The AH-260 has fairly limited frequency response and a mid-bass hump to compensate, but is a nice enough sounding headphone overall.
Case 2. Denon AH-C700 IEH (16 ohms, ~$150), uDac-2 vs. Realtek ALC272 HDaudio codec (Samsung n310 netbook)
The AH-C700 has a much wider frequency response, and as a result the comparison between the uDAC and the netbook's headphone out was more complicated. Yes, the uDac was more realistic, more hi-fi... but the higher resolution headphones were able to detect some roughness in the treble, roughness which increased with playback volume of the uDac. The ALC272 was mushy, but comparatively smooth.
Case 3. Sennheiser HD-600 (300 ohms, ~$300) uDac-2 headphone out vs. uDac-2 preamp out into Twilight 6CG7/FET mu-stage headphone amplifier.
The uDac-2 headphone amp with the HD-600 gave a result typical of the HD-600 paired with low voltage solid state headphone amps: reasonably ok but lacking the "grip" needed to get the best from these 'phones. No bass response, small, collapsed soundstage. Treble was smooth though. The preamp out to the mu-stage, with the two volume controls set at arbitrary values, put the headphone amp of the uDac in it's place with authority. The good news to take from this though is that the preamp out of the uDac is fine, excellent even, and it's not insult to the uDac to say it can't drive HD-600's. Very few headphone amps in the world today can.
Conclusion
Seems the headphone amp is a little starved for current. Otherwise full marks.
