Everyone thanks for your valuable input. So is the conclusion that if I had a subwoofer along with the system, the sound from my speakers would still sound good while people were talking? I did notice that the lack of bass immediately after I turned the volume up, which did not happen normally when I listen to it on my own. Also the thinness of the sound has to do with the fact that the speakers are low end? I was looking at a pair of energy RC-10 previously but did not go for it because of its price. Would they perform more satisfactorily at a party of medium size than my sony speakers? Or tower speakers are the only way to go?
PS I owned a pair of infinity 162 last year and i also remember playing music on them at a party with about 30 people in a large room. There was also the problem with the fullness and loudness of the sound no matter how much volume I increased. And I did have them with a subwoofer but my previous receiver did not have any subwoofer terminal(it was instead connected to the speaker terminal) and only had 50 watts per channel.
The thinness of the sound can be from several things, including the massive clipping your amplifier was doing at the time. Remember- clipping produces harmonics of the original frequencies and since there's nothing keeping the tweeters from reproducing this, it comes out. Also, distortion in the bass range will come out through the woofer (if the original frequency is low enough and if it's somewhat higher, it will be in the mid-upper audible frequencies. Also, if you really want to play it loud, 85W isn't enough. While it's true that doubling the power would only give you another 3dB, it would also delay the onset of distortion, so 85W from a 170W amp will be cleaner than 85W from a receiver that's pushed to its limit.
To get real full-range sound, you need a woofer. A 6-1/2" speaker isn't a woofer, it's usually called a 'mid-woofer' or 'mid-bass driver'. Sure, it does some bass frequencies but not well.
Cranking a small amplifier to its limit is like trying to tow a bus uphill with a VW Bug. It may get there but it ain't gonna be pretty. Power is power, regardless of its form. To make loud music, you need to move a lot of air. Small speakers can't do this. Look at the speakers if you go to a live outdoor or arena concert - you won't feel much if they don't have a large number of woofers but it will be loud. The reason it's loud is that they're using enough amplifiers to produce tens of thousands of Watts of power. Also, how much power and how many speakers are needed is determined by the size of the space, how reflective the surfaces are, the distance from the speakers to the listeners and the number of occupants.