@Shike and akaTRENT
Great responses. You guys have pretty much summed up my feelings about Dolby Headphone.
For me, the loss in definition is kind of a killer. I am going digital optical out of my pc right into the Astro mixamp. I don't know if the Astro mixamp is the best thing in the world, but it seems to be held in high esteem (at least with the people I've talked to).
When I push that dolby headphone button on the mixamp, the sound just becomes muddy by comparison to stereo. Although it's true that it creates a 3-D listening space, I can hardly bring myself to listen to it after being treated to the crisp definition of stereo that's coming out of my Beyerdynamic DT770s. Yeah, DH definitely does create a more 5.1 experience, and locational awareness is probably improved with it turned on, but I honestly can't tell a huge difference in picking out locations between DH and stereo. I spent a good 10 minutes last night just listening to blood dripping from the ceiling in F.E.A.R. with DH turned on, and off, and facing my character in different directions to see how it sounded to me (i.e., standing with my back to the dripping blood, my front, etc).
So yeah I don't know. Maybe the Astro mixamp just isn't that hot of a DH device, or maybe my dt770s aren't good for DH. Although I will say that I am loving the DT770s for both sound quality and comfort. I guess I'll just keep experimenting with it and see how I feel, but to me, that extra definition is worth whatever loss in locational awareness that occurs when DH is switched off. When I'm playing Crysis and I'm in a huge outdoor environment, DH suddenly makes it sound like I'm in a large room and it just sounds totally unnatural. It definitely seems more appropriate for indoor FPS's, but even still, that loss in definition is really kind of lame.