You're not alone, Joey :-)
I'll try not to ramble too much, but there are at least two or three points I'd like to address here (just my opinions, as always).
First, if the music was originally recorded in stereo, then all you can possibly do with DSP to spread it out to more channels is hurt it. Mono is a bit of an exception, in that it can be great through 2 channels, but I'll stand by the statement that more will hurt.
A good stereo recording should be miked to capture the room acoustics/ambience appropriately, and a good playback system should reproduce them accurately.
This gets to the second point: a critical piece of the playback system is your room. If it's too dead, or too live, or poorly set up, then it will not be able to reproduce the ambience of the recording. And if it can't, do you really think that some DSP algorithm is going to help?
(Notable exception here: there are some very expensive digital room compensation devices available these days, but that's a different story.)
Next point (I'm losing count), as far as I can tell, no one really knows how to make great use of multi-channel recordings for music purposes. It's not realistic, except maybe to the performers, to place the listening position somewhere on stage, in the middle of the musicians. This is not how most of us are used to listening to live performances, and (with perhaps a few exceptions), not how things are being recorded. Plus, as you suggest, there are still ongoing debates about the relative merits of 5.1, 6, 7, and variations on the number and placement of channels. And while people have been arguing about this stuff for quite a few years now, the vast majority of music recordings available today are still only two channel.
Most important point: do the math. Assume a simple system, with a single source component (turntable, CD, universal multi-channel disc player, whatever). Subtract out the cost of the source, and then take the remaining budget you have for your system. Do you want to divide this - for speakers, amplifier channels, and cables and stands - by 2, or by 5 or more?
I don't think it matters much what price point you're considering. At almost any level, you will end up with better sound by spending twice as much on two good channels, instead of diluting it among five or so. Alternatively, take the money you save and spend it on treating your room acoustics, and you'll still come out ahead.
As it happens, I'm fortunate enough to own at least one component that was reviewed in TAS - the Ayre D-1 CD/DVD player (they may have reviewed one or two other things I have, I've not been keeping score). I mention this because the guy behind Ayre, by the name of Charlie Hansen, makes exactly the same point about cost/benefit. While they do offer a lower cost disc player with more channels, you can't buy (or maybe can't sell...) a D-1 with more than two.
As for watching movies, I would suggest that aside from some novelty effects, a high quality stereo system - with good imaging, dynamic range, and articulation, will make for a more satisfying experience in the long run. The notable exception here is when you need to seat more than about two people, in which case the center channel speaker in particular will help a lot in keeping the sound coherent with the image.
Last thing for now: subwoofers. Yes, these can be quite tricky to set up, and properly integrate with the main speakers. Placement, level and crossover settings, and phase, can be very sensitive. Personally, if I had space constraints, a satellite/sub system might make sense, but I'd generally be happier to just buy a pair of (reasonably) full range speakers and not have to deal with the sub. Again, there are some cost/benefit tradeoffs here, and it depends on your situation - though as a bass player, you Must have something more than a pair of mini-monitors (you can't sub all the time).
As you can probably tell, I could go on about this for hours, but I think I'll go off and do something else while waiting for the New Year to roll in on this side of the planet.
Hope yours is a good one.
-Bob
