MixFixJ,

Since the downmix of the center chan. is totally in the digital domain you don't lose ANY of the information encoded in it when run in phantom mode. I'd be against it if it was a compromise like that.
The only 'red herring' you'll hear mentioned is a 'comb filtering effect' as the center chan. is being projected from two speakers. This you can hear w/ your own ears is not a real world issue (or you'd have heard 2 chan. audiophiles complaining about this effect for decades -where instead you still have some of the VERY best audio systems in the world being pure 2 chan. -not that I'm against multi chan audio).

I highly rec. you try a phantom downmix to at least hear how well (or poorly) it works in your system. You'll learn a lot no matter which you think is better for you since you still listen to 2 chan. CDs just like the rest of us.

I seen a lot of people who set their mains too far apart which isn't too bad when their watching movies 'cuz their center is more of a gap filler than the critical component it should be.

If the mains are too far apart the phantom center image will be more of a dull, cloud-like image than it could be. They mix the center speaker back in and say 'Oh yeah! It's a LOT clearer/sharper and more 'locked to the screen' and without a doubt... it is!

Thing is.. you should be able to get just as sharp/clear an image from your mains if you played with the set up more critically (improving your 2 chan. imaging on CDs in the process).
You won't have that 'locked to the screen' effect though.
But that's not what you should want.

That effect is mainly caused by the horizontal placement of the drivers (in most -not all- center speakers) which is ONLY like that so it can fit on or under a tv. It's NOT because that's a better position soundwise.
It throws more sound vertically than horizontally so the speaker doesn't sound as open or transparent by design (even with the best of components). Look at how Martin Logan has to use cones and domes in thier center speakers to counter this effect on their thin horizontally mounted 'stat panel.

In case anybody asks -"Yes I HAVE used center speakers in the past. Several."

There's just a ton of variables in this too though (you'll notice I'm keen on that word in this thread-heh).
Line source designs like long ribbons (which my Newforms are), Martin Logans, or multi cone/dome arrays are the best for a phantom center (I believe because the two vertical planes of sound blend easier than the circular outputs of cones/domes), but I have a set of Axiom Audio bookshelf speakers (cone/dome design) and find I can also produce an incredibly open and solid front soundfield compared to having a center in the mix.

Psychoacoustics are really massive big brained stuff. The vast details are beyond me, but the extent that I know and that I've heard, I much prefer the inherently perfectly matching phantom center to any center speaker I've ever heard (and I've heard several that cost far more than my mains combined).

The cool thing is that it's free for you to test, and if it's an improvement you just got better sound for free, and can sell that center speaker, save an amp, etc...

Kinda depends on the tv too. When I had a 32" tv and first changed to a 4.1 system to 5.1 it was VERY weird to hear the soundtrack smoothly pan across the my ~7 1/2' spaced speakers (and far beyond them) when all the action was taking place in a ~2' box in front of me.
For exam... someone walks across the screen. The picture shows the person walk across the small screen, but the sound has him perfectly smoothly pan across my entire room -exactly as the mix is designed. Super hard to blend a center speaker in as good, and impossible to blend better. And why add the cost if you don't have to?

Now that I have a 65" RPTV, this smooth/open panning is much prefered (though I prefered it from the begining).

As for surrounds. I use 2 rear monopole speakers 120 degrees behind dead center. Owning plenty of amps and plenty of loudspeakers I've tested 6 and 7 chan. set ups and found them to be less smoothly blended than just the two rear Newforms blending into the mains.

I was all set to sell the rear Newforms and get 4 all new side/rear speakers (when I compared the 4 identical speakers I own now), but it was just unnecessary to add more when the only goal is a totally solid surround field NOT any specific number -and 4.1 was enough for my 17 1/2" x 23' room.

If you have a VERY large theater and want the sound to be diffuse and as even as possible through out the whole room, you should add as many surround speakers as you can preferably dipoles throwing sound all over the place before it even hits your ears.

This is the design of a movie theater. They need all the seats to be about the same or everyone would kill to sit near the center of the room (which pretty much happens anyway), and this is one of the reasons why even so-so set up HT's sound far better than movie theaters. I don't use THX or movie theater in general as a reference point.