kmac, thats not quite true.
their are ipod docks, and then there is the Wadia itransport and the MBS Imod. Only the MBS and Wadia units extract an unblemished digital signal from inside the IPOD bypassing the internal DAC.
All ipod docs output an analogue signal directly via the analogue out of the ipod, ie using the ipod internal DAC. Even the krell KID does this, though it does ADC internally and then reconverts it, weird huh.
The Wadia itransport bypasses the DAC in the ipod and outputs the digital stream via spdif. it also output analogue in the same way as any other dock.
The MBS unit, requires a specially modified ipod at $1800+ to do the same as the Wadia.
Ther eis a new component coming from DLO, this outputs digital, but this is derived by performing ADC on the analogue output from the ipod, so is not true bitperfect. Basically this a cheap Krell KID.