MP3s do sound better
The Crystalizer upconverts music to 24-bit audio and fills in the missing gaps in lower and higher frequencies. There is no interpolating going on--instead, Creative sound engineers have come up with a secret formula that identifies certain instruments (such as cymbals or kick drum) and fills in the data that was originally trashed during compression. The more I use it, the more I realize it's doing more than just boosting frequencies. Bass is more punchy and prominent, and highs are crisp and alive but without jacking up levels. Listening to various electronica, ripped vinyl, live acoustic performances--anything with sound waves--I sensed underneath the enhanced lows and highs, an energy that just made my music sound nicer. And extraneous hiss is minimal at worst.
Of course, I compared some MP3s to their CD counterparts and though I can't vouch for the sound being better than a CD, I did prefer the aforementioned energy of the Crystalized MP3. Audio CDs sounded punchier with the Crystalizer on as well.
Both effects can be adjusted (in three levels) by tapping on the unit's upper right corner, where there's a button nested underneath the panel. When the appropriate light turns on, you twist the volume knob to get to your setting, which is indicated by the frequency of flashing lights.
Since it's an external device, the Xmod is particularly useful with a laptop. Controlling your computer's system-level volume using the metal knob is nice, too. It can also be used with any audio device by way of the line-in port, next to the headphone jack, though you'll have to use an AC adapter via the USB port (not included). A line-level output is located next to the USB port. While the Crystalizer works just as well for an MP3 player (I used it on an iPod), it's not as practical since it forces you to be stationary. We'd love to see the technology built right into an MP3 player someday (that is, a Creative Zen featuring X-Fi). Various players from Cowon (BBE effects) and SRS Wow-powered players already exist, and they too enhance sound--just not the way the Xmod does.
The Xmod package includes Creative earbuds, a USB cable, a soft case, and a user's manual.
Overall, I'm impressed with the Xmod, and at $79, it's worth checking out--even with all the PR marketing hoopla surrounding this technology. I don't like that it limits your "Crystalized" audio to the nearest power outlet or computer, but I think Creative's X-Fi technology will make it into portable devices soon.