Hi,
Dont panic, My thinking- I may be wrong
1. cd> laser> DAC(sampling)> analoge output
2. cd> laser> Digital output(coaxial)
Then is there any point in investing money for CD player or simply use DVD player? (as no DAC use in digital link)
Secondly are there CD players which can play MP3 also?
Well, if you connecting a good CD player (from companies such as NAD, CA, Rotel etc) it will be a crime to use the Digital out unless you have an amplifier that has state of the art DAC and amplification.
If you are looking at connecting a CDP through digital out to a good AVR, yes, a DVD player can do the same job.
Will it be same? I am not sure. Look at this way. A CD Player is fine tuned to play just two channel music. It has electronics that are focussed on this job. A DVD Player on the other hand has the following disadvantages:
1. The laser has to read a DVD in addition to a CD where the data is more tightly compressed. This may not be an issue, but there will be compromises.
2. A DVD Player's primary job is to play video. Most manufacturers, other than the very high end, give more importance to the video and DSP, than to two channel music.
3. A DVD player has to execute a large number of tasks. Companies such as Pioneer. Samsung, Philips etc., focus more on video DSP, and making the player as universal as possible. It is only companies such as NAD, CA, Denon (high end) etc that make DVD players that are also good music players. Even Oppo has started only recently. Before 2007, their DVD players were horrible for music playing.
Do CDPs play MP3? Yes some do, not all.
Is a CDP better than a DVD for music? At similar price range, yes they are.
Will a DVD player also serve as a good music player? Yes they will depending upon the brand. Some of the ones I can think of are NAD, CA, Denon, Oppo, etc.
I am biting my nails !!!!!

Cheers