Mike, There's no commercially available 7-channel software that I know of. As Gonk correctly pointed out, the closest we have is DTS ES Discrete 6.1 (which is 6 discrete channels plus a Low Frequency Effects track), and DTS ES & Dolby Digital EX (which are 5 discrete channels, plus one more surround channel matrixed in, plus LFE). As for how much software is available: last I checked, there were between 60-70 EX/ES encoded titles available on DVD. This may not sound like much but many of these titles happen to be some of the most popular and high profile movies on DVD. Chances are you probably have some in your DVD collection already. Yes, and you can do that in a variety of ways. On 5.1 material, that doesn't have a surround back channel specifically encoded in, you can still use EX/ES decoding to extract a surround back channel and send it to your rear speakers. This surround back information will be cancelled out of the regular surround channels so you don't get duplicate sounds behind you AND to your sides.

While EX/ES decoding can work fine on many non-encoded material, on some soundtracks (especially if they contain a lot of mono info in the surrounds) you'll notice that the surround field collapses to the back wall. In which case the 950 gives you the option of using Cirrus Extra Surround for back channel extraction. It works just like EX/ES decoding except that, after CES extracts a surround back channel, it doesn't cancel out that info from the surround channels. While you get some duplication of sounds in the rear and sides, the sound doesn't collapse to the back wall. Better for music than movies.

You also have the option of not using any additional processing when listening to 5.1 sources. In which case the sides and rears will be run in parallel, but all 7 speakers will be active. I think it's absolutely worth the cost, because a 7.1 speaker set-up has some real advantages. Even without using any additional processing, two surround channels sound better to me coming from four surround speakers; much better sense of left quadrant vs right quadrant in the rear hemisphere.

With proper decoding on properly encoded material, the results can be spectacular! EX/ES soundtracks have the capability of very distinct and well separated surround placement on your right side or left side or behind you (or any combination thereof). This effect is difficult, if not impossible, to do with only two surround speakers. And as far as rooms go, size doesn't matter (he says); e.g., even in a room as small as your's, can't you tell if sounds are coming from behind you or from either side of you?

Aside from movies, a 7.1 speaker set-up also sounds great with music (if you like listening to music in surround). You get a more ambient and enveloping experience and a more seamless 360 degree soundfield than with a 5.1 set-up.

BTW, one last thing: don't use a single surround back speaker if you can avoid it. Psychoacoustic studies have shown that sounds along the centre line can be confused; i.e., with a single back speaker, sounds from behind can sound like they're coming from in front of you. It's a well known phenomenon known as front-back-reversal. Using two speakers behind you, even if you don't separate them much, can help ameliorate this problem. This is also why pre-pro manufacturers that specialize in surround processing always recommend a 5.1 speaker or 7.1 speaker set-up, but never 6.1.

Good Luck,
Sanjay