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EFX is part of OpenAL which can also run many other effects sets such as EAX. If EAX is fading out it is being replaced by OpenAL based effect routines. Many new games also come with interal effects engines needing no external hardware. These are features some want and some don't just depends on what you do with your system and what your needs are. There is no perfect suggestions for everybody, some are better using DAC's some are better with soundcards and some use both!
Thanks for clarifying the EFX part; I didn't know that. It's true that everyone needs something different. But, if you only need good sound quality (no mic input, sound effects, etc.), external seems the way to go.