Don't want to spend a wad of cash and I prefer smallish components.
CD players always seem to wear out and I'm not sure that a DAC typically does (no moving parts) so it seems like a better investment...
I don't know a lot about outboard DACs but older CD players do fail. I do think there is a difference in sound quality between players, the biggest clue regarding how they'll sound may be to check the signal-to-noise ratio, and there is definitely a difference in reliability.
I've had a lot of different players, but my sample size is still too small to say anything definitive, and my comments are mostly about low to mid-range "vintage" players. With those caveats in mind, I've seen models from Technics, Yamaha, Pioneer, Harmon Kardon, Luxman, Kenwood, and on on, break and not be anything special sound wise. NAD is good sound wise but not great reliability wise. Nakamichi players sounded great but were really unreliable - kind of a shame as some could have been classics. Unless you are looking to match the other gear in your system, are getting them very cheap, or can repair them yourself, you can probably do better than these brands. Audio technicians often won't work on CD players.
The best, IMO, are the Sony ES players - and even the lower end ones like the 1-bit, 8X sampling models from the early 90s are really good, such as this X229ES. Non-ES players made by Sony are still pretty good and can be had very cheaply.
If you want to spend less than a Sony ES, get a Denon or a JVC. Neither brand seems to break. The Denon pro gear is not expensive and almost indestructible, and before everything went to computers, were the brand of choice for radio stations.
Cheap JVC players from the late eighties (16-bit, 4X and 18-bit) have a nice sound and keep going and going. There are other threads about JVC CD players on AK - for whatever reasons they surpass all expectations, even a low end one like the XL-V211.
DVD players with SACD capability are also a good way to go for sound quality, but not necessarily for reliability, some won't last very long. Two of the best I've owned are the Philips DVD-963SA and the Denon DVD-2900 and 2910, but the 2900 is far from being small and weighs about 18 lbs.
Note also that some DVD players have the downside of using video menus to turn certain features on and off, which makes them kind of a useless in a good old-fashioned two-channel audio system. If you have the remote that might be enough, but not always.