For the last year I've been running a Squeezebox over wireless, with both the software and music on an Infrant ReadyNAS NV+. The Squeezebox feeds a separate DAC via its coax output, which in turn connects to my amp. I have a second, wired Squeezebox which also sees occasional use in another room.
I've been very happy with the setup on the whole. The weak link is the NV+, which has a very slow CPU and that means the web interface is painfully slow. If you have a dedicated PC, or a better NAS, then you'll be fine. Even the NV+ can manage to serve FLAC music at over 1 Mbit/s to both Squeezeboxes simultaneously.
The DAC in the Squeezebox is quite highly regarded on the Slim Devices forum (
http://forums.slimdevices.com/), though I don't rate it personally - I find the soundstage very flat and two-dimensional. That's why I use a separate DAC, and if you have a decent system then I'd recommend looking into one. If you can afford it, there's always the Transporter, but I went for the two-box route instead.