Interesting discussion! Let me add a few thoughts to the mix. I think that most audiophiles consider the "room" as the most important factor in sound reproduction. I think that both David and Jeff have made valid points. In my previous home, I had a listening room with a 7 foot dropped ceiling in the basement. We ended up using a lot of both home built and commercial sound manipulation (mostly diffusion and damping) with my early system. My systems got better, but the sound treatment remained the same. After several equipment upgrades, we were listening one evening and one of my friends told me there was something wrong! He said the music was dead and lifeless. He was right! We took every bit of sound manipulation out of the room and the sound was actually better. Then we started over and only used what added to the music. I ended up with far less "stuff" than we started out with and the sound was the best it had ever been.
We learned that the relationship between the equipment and the room was the most important factor. These are large impacts. As I had upgraded equipment, the sound had gotten better and we didn't need as much treatment. But, the room still had problems that needed to be fixed. Once those problems were accounted for, changes in equipment, even if the difference was only slight, were much more noticeable. Our approach since then has been "get the equipment/room interface right first. Once the room is no longer creating difficulty in hearing minor differences, equipment (both active and passive) changes are easier to analyze and correct. Rarely will equipment upgrades require changes in the room interface.
In far fewer words, get the room interface right and the rest gets easier and more effective!
I recommend as a first step that somebody like GIK do a room analysis to determine where the basic problems lie and what can be done to alleviate them. Once these "gross" room corrections are made, then it is time to start analyzing the effect of the equipment on the quality of your sound. I am NOT concerning myself with electronic manipulation of room interface problems. While digital room correction can be effective, I prefer to use physical correction first and only move to digital correction if problems can't be corrected physically. This comes from a belief that the less "processing" associated with the signal the better the result will be. BTW, I have used calibrated mics and the programs that come in surround sound receivers to equalize my cinema room. Once the program is done, I find that I always end up using that as a starting point to obtain what I consider to be better sound quality by using manual "correction".