I bet they have just regular stereo and software. Here, take a pair of good stereo headphones and try this 3d demo. And don't forget to close your eyes.
Virtual barber shop: http://www.youtube.com/watch?v=IUDTlvagjJA
I would imagine that they're just processing audio in a way to create a logical spherical arrangement, and sounds that fit into that sphere at certain points have equalisation applied to them to give the psychological effect of being far away or close; in effect, most things can be done with equalisation! For example, guitar effects boxes these day commonly "simulate" cabinets. Each speaker cabinet has its own resonant frequency, and the speakers in it also have certain frequency responses (they are not flat responses), hence the reason 4x12" Marshall cabs sound a certain way. The speakers also have sharp treble roll-offs, so these cabinet simulators are just putting an equaliser on the output signal that sounds like the frequency response of a particular cabinet. This is also the reason that signals taken from an amplifier's "direct out" that doesn't have this EQ applied sound fizzy - the sound doesn't have the same response as the speaker (which happens to be really ineffective at converting the input signal to the output sound), and so the guitarist will compare the speaker sound to the "direct out" sound and think the "direct out" sounds rubbish! In reality, the sound they are expecting to hear is the massively coloured sound of the speaker but they are hearing the true-sounding DI tone.
(Your ears are far more responsive to middle/treble frequencies and not bass, but bass gives the feeling of power and treble the perception of loudness, hence the reason most "rock" equalisers on hifis or MP3 players boost those two, so you think "Wow, this is really powerful and LOUD!")
BTW, that's a great demo. Haven't heard that in ages.