When you use 2-channel playback, your own room creates its own ambience by the way the two speakers energize the room. In other words, it puts the performance in YOUR room.
When you play back with multi-channel, it places YOU in the original recorded venue, because the original delays and directionality are captured and played back.
It doesn't matter if the hall was 80'x120', the time delays built into the recording and your surround processor should maintain the timing cues of the original venue.
I don't consider one superior to the other. I have both and like both, mostly for different applications. I absolutely prefer 7.1 surround for film soundtracks.
I prefer 2-channel (especially with LP source) for most studio-recorded rock/pop/folk, as well as jazz and chamber music.
For large-scale orchestral music recorded in large halls, a good surround system definitely does a better job of transporting you there.
I have another theory in all this. It all comes down to connecting with the music. When I have an LP source, I don't much care about surround; in fact I often don't care if it's stereo or mono because there's such a strong connection with the music and the performers. With digital, I think the inherent connection is weaker, and the surround experience helps enhance it.
On thing really cool with surround playback: I have some Haydn symphonies recorded at the great hall at the Esterhazy palace. Haydn was the Esterhazy court composer, so this is where these symphonies were originally performed 200 years ago. I like the idea of being able to hear not only the music but the signature of the original performance venue as well.
Likewise, with surround you can hear the Boston Symphony at Boston's Symphony Hall, the Cincinnati Symphony Orchestra at Music Hall, New York Phil at Lincoln Center, etc. You can even adjust the surround delay and volume to pick what row you're sitting in.
