I should chime in here...
-The X-Fi Titanium HD is indeed a true X-Fi card, with the EMU20k2 DSP. It has Game Mode and Audio Creation Mode, and the OpenAL flags say that it does indeed have 128 channels and supports EAX 5 in hardware. (It even has the EAX-RAM flag enabled with 64 MB, a feature not advertised on the packaging, strangely enough.)
-Stereo/2.1 and Headphone mode on all X-Fi cards I've tried (Prelude, Forte, Titanium HD) is indistinguishable sound-wise. SineGen testing reveals no changes whatsoever. The difference is that the CMSS-3D option changes accordingly (from CMSS-3D Headphone to CMSS-3D Virtual for stereo loudspeakers), Windows speaker settings are automatically synced (they can only run desynced with X-Fi drivers set to Headphone), and volume changes to the last setting for speakers or headphones. And of course, DirectSound3D and OpenAL games both think you have two stereo loudspeakers placed in front of you, not headphones with drivers next to your ears.
-With the X-Fi card set to Headphones, nothing sounds different if you change Windows' sound setting between stereo and 5.1/7.1, so I naturally leave it at the latter for games with software-processed audio engines that read the Windows setting. In addition, sounds are downmixed automatically regardless of whether CMSS-3D Headphone is on or off, so nothing is missing channel-wise. Of course, running with CMSS-3D Headphone off severely impairs imaging in games for me, while hindering clarity in music with it on; good thing it's so easy to switch on and off!
Are you sure there isn't any placebo going on here?
Edited by NamelessPFG - 12/4/11 at 3:56pm