In theory you could use the I2S, but I went the easy route and hooked up a USB DAC (Behringer UCA-202 - good cheap DAC). Thanks to Pi's USB issues, you need to switch to USB low speed (dwc_otg.speed=1), but it's worked well.
I don't believe there is an ADC on the board -- adding an input would have added a bit of cost.
You can probably do it via a USB dongle with the new ports added.