Having worked audio at several venues, I can safely say that the audio coming into the sound board is in fact multi-channel. Each mic having it's own channel. When mixing out output and recording, USUALLY, those signals are sampled in stereo to the venue (R/L pods) and to a recording device (sometimes a 16 or 24 track recorder).
When mastering music discs, these recordings are usually muxed using the same sound board method to reproduce the concert audio (R/L stereo), but other times they process the music further and produce surround tracks.
A popular form of doing this is running the stereo through a Dolby Pro Logic software processor producing six discreet channels, which then are enhanced and adjusted to sound balanced.
After that, the 5.1 is encoded either in Dolby Digital 5.1 or DTS. DTS of course having the higher bitrate and better sound quality (depending on encoding hardware/software used).
I understand that not EVERY concert is the same, nor is every DVD concert the same. This is just the way it's USUALLY done.
As I said in my original post:
I guess in the end, listen to whichever sounds best to you!