Help, opinions on Yamaha receiver

[lcrngrs]

After reading many many posts I'm totally confused. I have a 7.1 speaker setup and just purchased the ps3. In order to achieve the true HD sound I'm going to purchase the yamaha 663. I understand that it is necessary to use the HDMI cables, but I'm totally confused on what to set the PS3 at. I see PCM recommended but I also see Bitstream in some posts. So which is the best? Next, since most movies are just 5.1, what is the benefit of having a 7.1 system? I currently have an older yamaha which is 7.1 which is why I have 7 speakers plus the sub. When watching movies using my samsung bluray player, now switched to the ps3, I had set the player to bitstream, and the receiver to extended surround, Yet my back speakers get no sound. When I switch to 7 channel on the receiver they all get sound but there is no separation. This brings me back to the 7.1 question. Why is it a big deal to have when most if not all movies are in 5.1? To recap, my questions are, settings using ps3 in order to get true hd sound and what should the receiver say? Benefit of 7.1 speaker system since most movies are 5.1. Any help would really be appreciated and I hope this makes sense. thanks.