Tooling is central to performance of any lathe.
The best investment for a lathe is a quick change tool post (QCTP), and could be regarded as essential for a CNC lathe.
I'm using the 0XA QCTP from Little Machine Shop. It's designed specifically for small lathes and is a wedge type QCTP. It cost me $130 plus shipping but worth every penny. It comes with the tool post plus 5 holders - you'll want a few more, which can be bought for not too much (though a few certainly adds up) or made relatively easy if you have a mill. I'd heavily suggest getting the 2MT (Morse Taper 2) holder - it will allow you to mount drill chucks / collet chucks easily and therefore do peck drilling (no need to use the tailstock).
The 0XA QCTP was a simple bolt on for my 7x14 - just remove the old toolpost and stud and put on the new stud and toolpost.
Using standardised indexable tooling has a number of advantages on a CNC lathe. Firstly you can replace the cutting edge without having to redo offsets / tool information, and the geometry is always the same. Secondly most CAM programs have libraries of inserts built in, so you can easily have your tools set up in CAM and therefore have appropriate tool paths and avoid clashes with the workpiece etc.
The downside is cost and practicality for small lathes. Inserts are not cheap. They are also almost all carbide which is not as forgiving as HSS. Inserts have different geometries, finishes and edges for different materials.
I'm using 12mm shank insert tooling from CTCTools.biz. I bought a SDJCR and SDJCL (CTC: SDJCR and SDJCL) - left and right cutting tools that use 55º (diamond shaped) inserts set at 93º to the lathe axis (allows profiling and turning a sharp shoulder and facing without moving the tool). The inserts are DCMT for non ferrous machining (Amazon: DCMT), other inserts for various types of steels are available too.
I was immediately impressed with the tools. The 12mm shank works fine with the QCTP on my lathe, and is nice and rigid. The inserts are sharp. They are working very well for me. Many purists claim you can't use a lathe without being able to grind good tools - well unforunately my time is quite limited, and having a repeatable perfect edge is well worth it.
Of interest Arthur Warner Co. produce indexable high speed steel (HSS) tooling. HSS is generally regarded as a bit easier to use and more forgiving as it tolerates slower speeds and a wider range of speeds
I haven't got one of these, but I've read good things about the Diamond Tool Holder from Eccentric Engineering (Located in Australia).
It uses common 1/4" or 6mm HSS blanks held at a tangent to the part and is supposed to allow great cuts. The biggest advantage however is that it only requires on face / angle ground and comes with a jig for that.
It isn't indexable, but would be fairly quick to get set right after sharpening.