http://david-heron.me.uk/blog/2007/04/08/virtual-barbershop

Make sure you use headphones.

They probably used something like this Neumann microphone. They use it sometimes when they record concerts to make it sound really great in headphones, it's too bad they don't work very well for normal speakers.

Here's a couple more.

http://david-heron.me.uk/blog/2007/04/26/holophonic-sound/

http://david-heron.me.uk/blog/2007/04/27/more-3d-sound/