I switched WinAmp to use the MAD plugin for MP3 decoding; it spits out 24 bit output for my sound card. How much does the precision of digital sound really matter?
My searches led me to this fine document on audio dithering. If you have sound in a format that's more accurate than your final output (say you're doing 32 bit processing and the end result is a 16 bit stream) then you don't want to just round off the sample - you want to dither in some noise. Why? It allows the lower bits to occasionally be expressed in the output and your ear is capable of picking the signal out of the noise.
The audio demos from the page are impressive. Effects are exaggerated (rounding to 8 bits) so you can hear them. Read the document for explanation.