OH yes! Without a doubt! Listen how much better it makes MP3's sound..... and then try an actual Audio CD (if anyone still has any of those)

OK, this is complicated and there are many opinion out there, you need to formulate your own.

First off is to decide what you application is, and then make an informed decision. If you are a casual gamer and just want it to play the odd MP3 and do surround sound for games and movies then stick with on-board. Now-a-days it will be more then enough for that usage. You're probably better off investing the money into better speakers/amplifier instead.

A few points to remember:
Onboard audio can output full surround in analogue mode, without hiss or noise. However, the onboard processing does not come anywhere near what a good dedicated card will be able to do. Also, it does use up your CPU, however, with the power of today's CPU that's hardly even worth worrying about at all.

The digital outputs from any sound card (onboard or dedicated) are all compressed, and yes, there IS a difference. Unless your game/movie/dvd is outputting in a dolby digital or other compressed format then your digital connections (co-ax or fibre) will only be playing stereo.

If you plan to do some serious music listening/gaming and or movie watching, then a sound card is worthwhile ONLY if you have good enough speakers. Even the flagship logitech Z5500 pales in comparison to a entry level component setup (but the logitech cannot be beaten in terms of value for money and power). No matter how good your speakers are, they are only as good as the signal they get, so if you have good speakers, give them a good signal from a dedicated sound card. Otherwise, you really are wasting your money.

As far a list of cards available, there are alot out there. Creative's X-fi are well received (however not in the audiophile world - they aren;t up to scratch), mine (I have 2) are slowly but surely killing me because of the infamous X-Fi crackling issue on nforce chiset boards. If you have an Nforce chipset, DON'T do X-fi!

Please can I have it! My T7 is dying!

I dunno, I had a pretty indestructible Cybershot T7 that maged to live thru many many drunken evenings (once even falling into a urinal, it still works!). I love the T7 so am definately looking at these as a replacement option!