go into your creative play center. there's an option for "environmental 3D". or if you have an audigy, like me, there's something called the EAX Goldmine Experience or just as weird... where you go thru all these 3D sound experiences for sound in game positioning. turn all those off. i always turn that off, because you only hear what's directly in front of you. if you swivel your head around or if the character walks around you, you can pick up snatches of speech or sound or music behind you, but at best it's terribly annoying, at worst, horrible when you miss important dialog.
V***V
i went thru that when i got my new audigy 2