Which would you say reproduces the sound better in a home listening environment. Upmixing using a very high quality receiver for a muli-channel listening (5.1), or maintaining the classic 2-channel stereo output?

I'd say the 5.1, imo.

define very high quality. are you talking about 20k+ or around 1k system?

I'm talking about the same receiver for both scenarios. A very high quality one. The receiver itself being about $1000-$2000. Speaking in terms of "very high quality" standards for an average consumer.