This is already been suggested, but I'd kill for an all-in-one DAP with the quality of a micro-stack, that supports a lossless codec like FLAC.
The current solution of a DVD player + desktop portable/micro stack is hardly portable, and a more portable DAP + amp, which is still a kludge, has inferior sound quality.
It would be good for Headroom to pursue because the market for DAP's is huge. Of course, it would be more expensive than just an amp alone, but I think there is reason to believe that the simplicity of an all-in-one solution would make it an easier sell to the average joe. You don't need to explain what an amp is or what a dac is, you just need to explain that here's a DAP that'll blow your socks off. For the hifi enthusiast, the elegance and sound quality would appeal nicely. It also fits in well with Headroom's existing line of products.
I think it would be pretty successful. I don't think a product like this could compete well in price or in features compared to the myriad of other DAPs out there. But, judging by how many people go through the trouble of modding ipods and carrying around all these wires and extra do-dads to get great music on the go, I think people would be willing to pay a premium. And, to me at least, gee whiz features, like viewing photo's on a 2 inch screen, are more a novelty than anything essential.