Why is 2 Channel better than multi-channel?

Have you ever noticed that it's often easier to place instruments by ear at home than it is in a concert hall? There's so much reverberant energy in a "real space" that a two-channel rig in a home environment can't begin to capture. (Neither can a 5-channel rig, in my opinion.) In fact, the clear spatial cues in a stereo recording partially make up for the fact that you don't have the visual cues you do in a concert hall. And yes, Hindemith, I suspect you'd give up some of those spatial cues (which help you distinguish instruments) in a multichannel application. What you get in return is something closer to the concert hall experience. So there is a trade-off there, and you have to decide what you want.

Is anyone out there using the PANPOT? Is it worth to use an extra amplifier and a second set of speakers to send the (L-R) signal?

It's pretty logical and simple: Before the digital technology all recording engineeres needed is enough space and recording speed to place every detail of the live music onto the tape. Thus, 2ch recorders benefit with channel separation and amount of information stored per one channel on the magnetic tape to the multi-channel recorders. Also most of the professional recorders are using thick tape for the same reason. Mono recorders/reproducers are able to get maximum possible information(that's why I love mono recorded music)
Even in today's digital technology it does make a sence to still produce 2ch recordings guess why?... the same reason. Better channel separation and more information(bits) can be fit onto one track. Digital signal is nothing else but high analogue freequency with the phase shifts that we call digital samples.

Gboren: I think you don't understand the *possibilities* of 5.1. I've heard gimmicky recordings that put me in the middle of a barbershop quartet, and they sounded, well, gimmicky. What good multichannel should do is recreate the reverberant energy of a concert space. What should come from your surround speakers isn't instruments, but the reflections from the walls of the concert hall or whatever. Done right, it should sound like you're sitting in the middle of the hall, not in the middle of the orchestra. But not every recording engineer is equally adept at doing that. (Note the vast understatement there.)

Bomarc:
Fair enough. I fully agree about the possibilities of multichannel. But it has always been my impression that audio engineers have been putting their energy into creating more realistic explosions. When these same Terminator junkies master a music concert, they tend to use the same sensibility: put the listener in the middle of it.

I would love to hear multichannel music that is properly mastered. But where is it? How many titles are out there? And given the increased cost of setting up a multichannel system, will there ever be enough demand for audiophile multichannel to drive a market?