I bought one of these to act as a digital-to-analogue converter when sending music data from an external hard drive to a stereo amplifier and speakers. The DAC itself is a Burr Brown chip manufactured by Texas Instruments, and while it is not of audiophile quality its output is a big step up from that of the Realtek sound card in my netbook. To improve on the UCA202 you have to start spending serious money. The law of diminishing returns quickly kicks in.
The UCA202 takes its data from line-in phono (RCA) sockets or via USB. Windows XP and Mac OS X were quick to recognize it, but I had to do some tweaking to get Amarok to play along under Xandros Linux on an Asus Eee PC.
There are three outputs. The first is digital, a Toslink socket carrying an S/PDIF ("Sony/Philips Digital Interconnect Format") signal. If you have an amplifier or receiver with an optical input, this is the one to use, since it's odds on the DAC in your amp/receiver will be better than the UCA's.
The other two outputs are analogue. A switched, standard female 3.5 mm socket is designed principally for monitoring using headphones, while stereo analogue signals to your amplifier (etc.) should be taken from a pair of phono sockets. You will need to supply your own paired male phono to male phono lead. Such leads are often supplied when you buy a stereo component like a CD player or tuner. When I first hooked up the UCA I used a basic, bog-standard lead. Then I tried some audiophile interconnects I made myself and was surprised how much better the UCA performed, a testament to its quality. Playing FLAC files from foobar2000 or Amarok, even into my relatively modest system, the results are impressive.
Physically, the UCA is small and neat, and the integral USB cable is a reasonable length. I would recommend it for someone normal setting up a system to play music from a computer -- someone who is not a confirmed slave to hi-fi upgrade mania, but if you are unlucky enough to have been bitten by that bug, you'll probably want to look upmarket!