I'll second N's post..I have 2 cd players, a 5 year old Yamaha 5-disc jobber and a used Arcam that would have cost about 5 or 6 times the price brand new, that gets really good praise here and on other websites.
I cannot honestly say that I can tell a significant difference in audio quality with the Arcam. I give it the benefit of the doubt and have it hooked up to my 2-channel system instead of the HT in the living room.
Your DVD player should be fairly competent.
Upgrading your speakers would yield more significant results in my opinion.

For what it's worth: I tried out the entire Paradigm Studio line when I built my home theater. I too prefer the 40's to the 60's and 100's. My experience with the larger speakers was that they sacrificed detail and mid-range performance for extended bass. A good sub cutoff at a low frequency like 60 or 40Hz would out perform them anyway. The Studio 20's might actually be the best for you if your room is fairly small. They have incredible imaging and soundstage. I have the version 2 Studio 20's and 40's, the v.3's are a step up on these. Definitely put them on your audition list.