There are acutally three types: online, line-interactive, and standby. 'True' online UPS' have the power drawn always from battery through AC-DC-AC conversion. Yes, the ultimate way is to set up a battery farm and wire DC directly into all your components. For people don't mind seriouly mod every single gear of theirs and don't upgrade often, that would be the way to go. For the rest of us, the 'right' online UPS can serve the purpose Karthikn desired without sonic degradation and perhaps some sonic enhancements.
Not necessarily the ultimate way. The problem is then shifted to the DC-AC convertor. You have to insert a 50 or 60 Hz sine wave and that's no easy job. Manufacturers use low resolution CPUs for price reasons, so what you end up is a very loose approximation of a sine wave.
In my experience, this is more harm than gain, because the sound you usually get from your audio is typically below what it was without. Of course, it can be done really well, but then the price becomes, er, hard to bear.
What you guys are talking about is a wonderful solution for preamps, tuners, CD players and in fact most things BUT the glutton power amps, which need both large currents AND large supply voltages, which is very hard to do well without paying an arm and a leg.
Stax had a monophonic 100WPC power amp like that some years back. Amp weighed in at around 45 lbs, batteries turned in just short of 200 lbs. They had to keep them on a tray with wheels.
Cheers,
DVV