What is the most important element in digital music playback ?

[poxich]

I use my pc as my stereo now, so when listening to digital music (mp3s) through a pc, what is most important the headphone/speakers, the original source file or the sound card ? Does the software make a difference i.e. i-tunes vs. songbird ? Is FLAC worth the extra disc space ? Lastly, how can I get the most out of listening to digital music ?
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