Hello everyone, I have a problem with a set up I want to do. Well I need advice on what is best on what I want to do. 
I am going to get the Mad Dogs which I want to get a DAC or a soundcard in order to amp it up. The problem is that I heard that DACs don't give surround sound, which would not be beneficial since I will be gaming and would like to hear all around me. I was thinking of getting the ASUS Xonar U7 to get that ability but I am not sure what's best. Just get a sound card like the Creative Sound Blaster Z or use a DAC like the ASUS Xonar U7. 

Not entirely correct - DACs are never what you get for surround sound, true, but also because they can't receive surround sound through USB. If however you have a motherboard that has decent on-board sound processing (some come with SB EX, some with Dolby Headphone, etc) and SPDIF output, you can get a DAC-HPamp unit or combo that takes the same kind of SPDIF input, and the virtual surround-processed gaming audio will get to the DAC chip. Some AUdioGD's go for around $250, while the Schiit Modi Optical+Magni goes for $200.
 
This way you basically get an amplifier that can run a wide range of headphones, and a DAC that can feed it a proper line level signal with no need to fess around with the output level (especially if you have to use Windows volume control to do that).

Thank you for the quick reply! So getting the Schiit Modi Optical+Magni combo would permit me to run the Mad Dogs and have surround because of the combo being able to process the surround from my motherboard.

Yes, just make sure your motherboard's on-board audio has the proper surround sound support. My MSI board supposedly comes with Dolby Headphone but all the ways I tried to download it and run it never worked. I picked up an Asus Xonar U3 external card and surround is running smoothly (and before you ask, this works through USB because the DSP chip is on the U3, something soundcards internal and external have but not DACs).

Alright thank you for the information, I really appreciate it.