I would somehow think, that in theoretical terms, any digital process would be a better solution than hardware. After all, analog hardware is just a collection of hard-wired op-amps etc. to perform a fixed fucnction.
I would say that most modern 'hardware' works in the digital domain (if only internally). In that respect, they are still 'computers', under software control - just dedicated ones which can't be called upon to do the odd bit of wordprocessing. The features they do contain are simply those chosen by the manufacturer with respect to his price point and target market.
As far as the original question is concerned, a hardware compressor only offers one advantage over the existing setup - it would be possible to compress, in realtime, the incoming signal. Whether or not this is desireable, or even necessary, rather depends on what the system is being used for.
I have an audiotrack inca88 and pluggin my mic in straight and using CEP's noice reduction has given an acceptable SNR
Based on this comment, I would say the last thing he should be looking at is a compressor. What he really needs is a quieter signal path. There is absolutely no justification for having to use NR on an original recording!
Therefore, if 'upgrading' is really what _ronin75_ wants to do, he should consider a mic pre-amp or small mixer. I'd plump for the latter, as its pre-amps will still be a lot better than the Inca88's and it's a more versatile bit of kit to have around anyway.