If you're using any type of freeware, then you're better off with mp3 because a freeware-encoded 448kbps ac3 5.1 track sounds as bad as a 128kbps stereo mp3.
I 'upmix' film music into 5.1 all the time, and I do it channel by channel as WAV files, then load them into Audacity and play them in stereo, monitoring and adjusting the levels using my headphones. I use Sony Vegas to encode the 5.1 ac3 files because it encodes with professional quality. When I play back the finished music on my home theater system, it works every time.
I normally work with 5.1 surround music then assemble them as DTSWAVs, for burning onto a CD - a DTS CD.