I've just spent the last few hours reading back through this thread from the start (phew...) i've learned a lot and been totally confused. My personal answer to the question based on having read, studied and corresponded with people in the audio recording business is that DSD is a superior way of capturing music but a pain in the arse because of it's inability to be mixed easily i.e without conversion to PCM (which slightly defeats the object of capturing in DSD) or mixing out to analog or mixing prior to capture in analog. The fact that many very reputable sound engineers are willing to go to the hassle of working in DSD tells me that there is something beneficial going on with this format - and don't say "yeah because they can charge you more" because no-one out there is making a fortune out of flogging DSD!
How it sounds on playback is, obviously made clear by all the proceeding posts, totally confusing because of the many variables people have in their set-ups. Many peoples experience of hearing DSD is from SACD and this is not a good basis to comment from; most SACD players convert to PCM and the vast majority of SACD's started as PCM or have been mixed through PCM, also it's only DSD64, now superseded by 128 and 256. So the first thing is get some DSD files that have preferably not been mixed in PCM and try those out to give a true representation of what this format can or cannot do. PCM and DSD do sound different all other factors assumed equal, at the end of the day it is a red or white wine question for the individual, personally I prefer red wine and DSD over white wine and PCM.