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You're trying to argue a point that you don't have any idea about.
1. Stereo means 2 directions. There can be two directions of sound and the cross-way between them.
2. 7.1 means the amount of coverage that the multiple speakers from a multiple directional speaker system uses. There is no 7.1 surround sound headphone because there isn't a 7.1 plug in to my receiver.
3. A Headphone wrapper is what is used to make a headphone sound as close as to speakers would.
The reasons above are why Headphones are #2 in audio behind Speakers. Speakers can have multiple direction with different changes and great audio. A headphone usually only has 2 drivers that broadcast sound. The more expensive headphones and setup come close to creating the speaker configuration, but nothing close.
I said that games with a proper sound engine and renderer have a 3D sound space already. It's up to the sound device to decide how to present that 3D sound space, be it stereo, binaural (which is what I'm aiming for as a headphone-only user), or multiple speakers, unless it's already mixed in software and out of the sound device's control (which isn't how it's supposed to be done, but is how XAudio2 does it, and probably FMOD too).
You're right in that there is no proper "7.1" headphone worth talking about, but there doesn't need to be. Two good drivers are all that is needed for binaural (NOT stereo) sound. Think about it: we only have two ears, yet we can perceive sounds coming from any direction in reality. This is exactly what binaural sound aims to replicate.
If you ask me, binaural sound done right will outdo 7.1 speakers in pure imaging (perceived sound quality is another matter entirely) if the HRTF used matches the listener's HRTF perfectly. You'd need more speakers surrounding the user not just on the same level, but above and below as well, and then the room needs to have the suitable acoustic treatment, and most of all, the game needs to support outputting to such a speaker format to begin with (if XAudio2 et al.), or the sound device needs to support it (DirectSound3D or OpenAL).
The problem is that the HRTF used often doesn't match the listener's HRTF perfectly, so the surround speakers in an ideal configuration tend to have better imaging for anyone sitting in the sweet spot. But the problem there is that most people don't have a proper, acoustically-treated room with perfectly placed speakers, either. Headphones take the room out of the equation.
I don't care about making my headphones sound like a speaker setup; that's just an unnecessary abstraction to reproduce game sound to me. Nor should it only pan sounds left and right ala pure stereo, because having no sense of front and rear spatial imaging mean less situational awareness, less immersion, and more chances of getting killed because you looked in the wrong direction. To quote another Head-Fi user whose name I forgot, "With speakers, they're here. With headphones, you're there." I'm aiming for binaural sound that puts me in the middle of the action with nothing in between my ears and the game environment itself, most certainly not a virtual speaker setup conforming to movie formats.
