The surrounds are for ambience, they generally don't have the same content as the mains, particularly the rear surrounds. Your choice of upmixer seems fine. 3/2/1 is another way of saying 5.1. If bluray you should have choices of DTS-HDMA or Dolby TrueHD, often 5.1 but sometimes 7.1. You could try those modes directly instead of using the upmixer.
You said sound quality and it sounds like you're talking about volume. Is it just the volume you're concerned with?
Explaining your speaker setup (locations, positioning sort of info) might help, as well as the settings for your speakers and bass management.