Of course, nerds everywhere are skeptical. We view this problem like nerds should: there's no way a sound card can magically violate the laws of information science. MP3s are compressed with a "lossy" algorithm, meaning that some of the original information is discarded and you're just getting an approximation of it. Therefore, given only the MP3, nothing can reproduce the original sound exactly, so you will never get the "original" quality out of your 128-kbps MP3. But Creative goes a step further: they actually tell you that your audio will sound "better than the original CD or DVD."
I can't really blame Creative's nebulous marketing, though. They're just trying to sell add-in sound cards when almost nobody needs an add-in sound card.
Gains from high-end (expensive) audio equipment have always been 99% placebo. Detecting subtle differences in audio is incredibly difficult, and generally you can only find differences if you think that they're supposed to be there. (And even then, if you actually do a blind test, you probably can't tell which is "better". But armchair reviewers never do blind tests because they're too much work.)
But are they really fulfilling their promises, even if the gains are purely psychological?
My mother, a huge fan of "alternative medicine", had surgery last fall. To relieve pain during her recovery, she paid another woman $75 each week to put her hands on my mother's back and hold them there for an hour while playing a Nature's Sounds CD from The Sharper Image. (Both of them would probably describe it differently.)
Afterward, she always felt better. (The "healer" probably felt better too.)
There was no medical reason for this improvement, but my mother believed some complex new-age theory about bodily energies and such. I was cynical and blamed the placebo effect. But, regardless of the cause, she really did feel better. That's what she paid $75 for, so technically, it worked.
Therefore, Creative's marketing for the X-Fi's sound quality is doing exactly what it's supposed to be doing: convincing people that they will perceive better sound quality by purchasing this product.
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