The DAC in the iPhone is as good as any external DAC you can buy, when it comes to human perceivable sound quality. Any other claims are audiophile BS and placebo.

There are valid product reasons for moving away from the 3.5mm jack though, like adding a power line that allows you to make active noise-canceling headphones that don't require their own battery, or outputting to more than two (stereo) speakers over a single cable.