I was going to buy a Fostex headphone amplifier this summer, to make use of the digital output from an iPod Touch, but was very fortunate to see this player on the Amazon site before purchasing the Fostex. It is so much better than anything I have tried before, including my cherished Cowon S9, and can safely be thought of as real HiFi. Using its own headphone output, it is sensational, revealing all sorts of details in recordings that I had not heard before. But there is also a digital output, which into a DAC is even better. I haven't dared plug it into my Meridian processor as I am genuinely worried that it will eclipse other sources. As I understand it, very low jitter, and excellent upsampling create a really superb source to play your digital rips/dowloads. In practice, the effect is to be stopped in one's tracks, to then listen to music; it's like the music is being played live.
The Colorfly also gives you an opportunity to play the increasingly available HiRes recordings, which sound just fantastic.
I have to had add that the retailer (JLS Funk) offers superb support, and the Frankfurt team are also incredibly helpful (I had the wrong update file, when trying to update the firmware; the player worked flawlessly with the latest version of the firmware).
Problems are confined to a need to convert album files to a single file, as it is not 'gapless' yet, as the product is still evolving. If you can use Foobar to convert files - it is very easy - you can have the most amazing experience.
I think this product redefines what is possible; a high-end product you can take with you. It really is up there.