To start with, don’t worry about the PS2’s sound quality. If it can output DTS, it’s fine.
But almost everyone I know who has a stereo system, including some people with some remarkably expensive equipment, have terrible setups, acoustically. The room is by far the most important component in the audio chain, and it’s surprising how many people expend great effort choosing their equipment, then set up their speakers in almost random fashion.
So here’s some advice: Make sure your speakers are equidistant from the side walls, and (usually) about 2-3 feet from the side and back walls. For movie watching, the tweeters should be just at or slightly above eye height.
If you have dipole surrounds, they should be mounted on your side walls directly adjacent to your listening position, and 2-3 feet above seated ear height. If you have regular surrounds, they can be located on the side walls slightly behind the main seating position. You do NOT want to be able to tell where your side surround sound is coming from. The side surrounds are designed to build a ‘reverberent field’ that gives movie soundtracks natural ambiance and life. If you can locate the speaker with your ears, you’ve got it in the wrong place.
Your subwoofer should be located in front, but not in the center of the room. Offset it. You should experiment with your sub location - place it in a spot, and sit in your normal seating position. Does it sound boomy? Are there frequencies which seem to be missing? Move the sub to a new location, and try again).
The center channel speaker should be located right OVER the viewing device. A little-known fact about human hearing is that we are very good at locating sounds that come from below ear level, but not when it’s above ear level. So if you want your center channel dialog to sound like it’s coming from the actor’s mouths, located the center channel above the screen instead of below it (the ultimate is directly behind a perforated screen, like theaters do, but if you have a TV that’s not possible).
Now set up your seating position. If your room is enclosed, the worst place to sit is directly in the middle of the room, because that’s where all the waves bouncing off the walls will meet and create nulls and peaks. Instead, divide your room into fifths, and set up your seating about 3/5 of the way between the front and back walls. Also divide the room side to side by fifths, and set up your seating so that you sit at the 2/5 and 3/5 points.
Next, put some simple acoustic treatments on your walls at the ‘first reflection points’ for your speakers. To find that point, sit in your favorite chair, and have someone move a small hand mirror along the wall. Look at the mirror, and when you can see the speaker in the mirror, that’s the point where audio waves will bounce off the wall and come straight at you. The problem is that the sound also come straight at you from the speaker, and the reflected sound arrives just a tiny bit later. The result is a smearing of the soundstage and ‘comb filtering’ which can add distortion.
Once you have found your first reflection points, put some wall treatment there. An effective treatment is an acoustic panel. You can make them yourself out of 1" or 2" rigid fiberglass ‘duct board’. Just nail it to the wall like a picture. If you want to make it look nice, trim it in wood and cover it with cloth.
A cheaper alternative is to get some acoustic ceiling tile. Armstrong “Fine Fissured High NRC” tile works well, and you should be able to buy pieces for a couple of bucks.
Another reflection point is the wall behind the speakers, so if you want to get even better sound, put some acoustic treatment on the back wall as well.
Many listening rooms are too ‘bright’, and have slap echoes and other problems that create listening fatigue and ruin the realism of a soundtrack. Clap in your room - if you can hear any echo at all, your room is too bright. Either put more treatments on your walls, or put in some soft furniture, or if you have windows put heavy drapes over them.
Spending a day’s work and maybe $100 in materials will do more for your audio than spending an extra $1000 in audio gear. Everyone should do it.
If you want to get really serious, I recommend ETF, a free analysis tool that uses your PC sound card to do full-spectrum analysis of your room.