Streaming FLAC - does anything upstream matter?

YMMV, but in testing some equipment these past few months, i found that streaming WAV sounded much better than streaming FLAC (yes, i know bits are bits).
the difference was so large that my co-evaluator and i quickly agreed that we would do no more evaluations with FLAC and I've since converted my entire music collection (>40k tracks) to WAV for streaming in the house.

System:
music files on Netgear NAS, gigabit LAN running Logitech squeezefox server to Sonore streamer in LMS mode (aka squeezebox client), Sonore powered by battery option.
Sonore streamer to TotalDAC D1-dual.
the difference is immediately and repeatedly obvious on all my evaluation test tracks, folk (John Renbourn, Fairport Convention), classical (Mahler, Ramirez), pop (Beach Boys), rock (Bonnie Raitt, Zappa) , jazz (Basie, Ellington) and audiophile favorites (Belafonte, Alison Krauss).

Why? Who knows at this point. A recent series of articles in the audio mags discussed quasi-objective methods of assessing sound quality differences and an interested footnote in one of the articles noted that the difference between FLAC and WAV, which was quite large, went away with a later version of JRiver software. So there seems still to be some tweaking related to streaming/jitter/buffering/noise and everyone's setup could have different limiting factors.
At this time, I prefer to have my streamer non-integrated with my DAC as advances are certainly underway as we start to understand the what/how/why of digital streaming............and of course, each DAC has its own sensitivity to jitter, etc so it isn't clear to me that there is a single root cause or silver bullet.

I also prefer a seperate streamer next to the DAC instead of both options combined in one machine. I am constantly building and tweaking streamer-pc's for the last 3 years and arrived to the following configuration. 2 underclocked/undervolted fully passively cooled small pc's without any mechanical moving parts in them. One SSD for the music, one compact flash card reader with a upgraded clock module for the OS. Both are battery powered. For the pc's itself (mobo and cpu) I use a fully linear PSU, which is dual rail. Allmost every modification made it sound nicer.