I listen in a sizeable living room to a five speaker surround system that allows me to listen to Dolby sound by way of DVD, and also has a sophisticated digital processor that handles CD and LP, synthesising rear channel ambience when I choose it. All outputs are digital to the loudspeakers, which have their own DACs. Although I boast, it is high end stuff.
One thing that is quite critical is the calibration of the five speakers in terms of distance and level, and on music the settings on the centre front speaker are critical. Too much level and the separation suffers. I've spent a good deal of time getting it right.
Sitting on a glass table above my centre speaker until recently was a massive Loewe TV, quite an old CRT with a 32" screen, and we have now replaced it with a large HD flat screen model which sits in roughly the same position but further back in the space between the speakers. Naturally I was anxious in case the balance need a lot of adjustment, although I did not anticipate too much difference.
The results have been spectacular, with a deeper sound stage and better imaging all round. Voices in opera are no longer quite so upfront, and it all seems a lot more comfortable.
After years of listening this really underlines for me the importance of room acoustic and speaker placing, even if, as I did, you thought it sounded good!