I bought two Raspberry Pi(es) to use as audio servers and have been disappointed by the sound quality. The on-board audio out's DSP has limited bandwidth so sound is down-sampled to 11 bits. Scratchy. It's not advertised so that was a let-down.
Using a USB AUDIO dongle is no-go either, because of the crappy USB drivers. Stutters non-stop. Here are oscilloscope grabs of two music samples and a 1Khz tone: http://imgur.com/a/rVR99 The flat parts shouldn't be there. The only way to get good sound now is to use rather expensive USB soundboards or the HDMI output, but extracting line-level audio signals from that isn't a simple or cheap proposition.
The power design should be re-thought. If you power your Pi with exactly 5 volts, the voltage drop in the polyfuses causes early failures if you connect peripherals that have medium current demands. If you're lucky your power adapter might supply a bit more than 5 volts (5.25 is nice) and you might not experience too many problems. Me, I've soldered supply wires to test points T1(vcc) and T2(gnd) and bypassed the fuses completely.
I hope they come up with another revision, add a Low-drop-out regulator (+$2) and figure out the USB naggies.
Until then, caveat emptor.