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This Wikepedia article on localization of sounds gives a fairly decent discussion of how the ear does this. http://en.wikipedia.org/wiki/Sound_localization
Most scientific work has concentrated on time and loudness differences between the 2 ears as the basis of the perception of direction.
There are a couple of interesting points the author(s?) make such as that loudness differences don't apply at lower frequencies because the ear doesn't cause a shadow at lower frequencies. In effect you don't get a physical loudness difference between the ears, as frequencies drop, for any external sound source or speaker. This is the reason why some people say that it doesn't matter where you place a subwoofer, your hearing can't localize it as well as higher frequency speakers.
However this is not the case with headphones where you can create a loudness difference between the 2 ears because each earphone feeds a separate ear. This would imply that you can have a better localization of bass with headphones than you can with speakers, or even in a live listening situation.
You will note no discussion of Head-related-transfer-functions (HRTF's) other than a brief mention that pinna structures could affect directional hearing. This probably is because there has been little experimental evidence that this is an important cue compared to time and loudness differences between the ears which have been extensively studied in both psychophysics and neuroscience for a century or so. . This will, like my discussion of 'phantom channels," also probably come as a surprise to some here who seem to assume that HTRF effects are the basis of stereo/ directional hearing.
However, anyone who has listened to an IEM, which does not involve the pinna at all, and thus creates no HTRF, will realize that a good stereo image can be obtained even just feeding signals straight down the ear canal. So it is pretty hard to argue that HTRF's are especially important for localization. But I don't think IEMS give much sense of externalization, sounding aggressively "in-the-head." My guess is that they are more important for that purpose.
Now most non-IEM headphones produce a strange HTRF because the drivers sit at the side of the ears. So at best headphones are telling the brain that the sounds are beside the head, certainly not in front. This is the only real advantage I can see with speakers, except for a few phones such as the AKG K1000 and Stax Sigma, which place the drivers ahead of the ears and, I think, sound a bit more speaker-like, while preserving the advantages of headphones.