I like separates for a few reasons.
1 AVR's tend to have break down issues
2 Of course power, no avr puts out 200x5 with all channels driven
3 looks, I like how a bunch of matching components look in the rack
4 Upgrading - with the emo line you get 25-40% off your upgrade and keep your old processor
5 if you buy an avr today, in 6 months there will be a new one to replace it, whether its a new hdmi version, or a new type of room eq, whatever something new will be out in 6 months bigger and better...
Now if companies like emotiva and outlaw didnt exist, separates would be out of reach for most people but you can get a UMC200 and UPA5 for under $1000, thats not a bad deal...
If you dont care about matching components, than pick up a xpa3 and an avr with preouts like the 709 for $400, run your surrounds off the avr and front 3 off the amp, the avr will easily power the back 2-4 and will have much less wear and tear.... PLus this allows you to have sound while you upgrade if you can not afford to do it all at once..
As far as sounding better, I do notice a difference, it opens up the sound, and gives you much more room for playing loud with no chance of clipping, plus lets not forget you can pretty much choose whichever speakers you want since you don't have to worry about getting some efficient 8 ohm speakers, you can get 86db 4 ohms if you like..