AEXs are great and I'd recommend that route too - you can also install the free Apple "remote" app on your iPhone (one of the most polished pieces of software I've used) which lets you browse/play things to the AEX from any iTunes repository (eg. MacBook, iMac, etc). It means you can play music from your computer's collection even if you've only got your phone on-hand. The best part is it's all seamless and elegant to set up, and if you have various macs/collections, the iPhone app will let you access multiple computers too.
There's a free app (for OSX / MacOS) called XLD which will bulk-convert FLAC (or other lossless types - AIFF, WAV, etc) into ALAC (Apple Lossless) which will be useful if you have a lossless collection, and it's definitely the main way I'd be using the AEX personally - it will handle 16/44 i.e. regular CD quality.
The thing most people DON'T know however, is that the A1264 model has the best inbuilt DAC. It also has lower jitter on its optical output if you wish to use your own DAC. The A1392 (square AppleTV-esque shape) that Ken Rockwell raves about is not the one to get if you have a choice - I know this because I bought a few based on his raving, and later bought a few of the others to try, and have A/B'd them multiple times. I currently have 3 or 4 of each model. If you read between the lines on the test data carefully you can see it numerically, but the way he talks about them is misleading. I currently use the A1392s for less important locations (bedroom, printer wifi'ing) and use the A1264s if audio is a concern. Be careful choosing, as the older A1088 looks the same as the A1264, but the model number is on the label and most people put that in their ads thankfully.
My advice - grab a couple 1264s off the bay and try the inbuilt DAC first, feed it the best quality files you have, and you might be pleasantly surprised.
If you want you can add a different DAC later as Nashou66 explains.
Finally - just as a little sidenote - the 1264 has a handy option to set up a 5GHz-only 802.11n network, a feature the later 1392 doesn't have (mixed-mode only, which almost always defaults to 2.4GHz). This is pretty handy for any apartment dwellers / anyone where the 2.4GHz spectrum is polluted / busy, you can enjoy clearer reception and wifi performance (not necessarily audio, just in general).
Just thought I'd share everything I know in case it benefits someone in the future. You can get all models abundantly off the 'bay for ~30-50 bucks still.