I must admit I was somewhat dubious as to how headphones could give a 7.1 surround sound, being as those numbers refer to an array of seven speakers plus a sub-woofer arranged around a physical position and the headphone's natural limitation in having just two speakers. However I was pleasantly surprised by the effect produced through just those two speakers, there is a noticeable, roughly 180 degree, directionality to the sounds produced in the game world.
There is a small program that you download from Logitech that shows off the ability to create seven distinct sound positions, centered around the wearer's head. I tested this myself by loading up a game (GTA4), closing my eyes and moving the in-game character so as to be facing the source of a sound and opening my eyes, without fail there would be the source in front of me. This 7.1 effect is simulated of course and I assume it alters the timing and pitch etc of the left and right sound channels to mimic the slight differences between the sounds perceived by each ear.
You do need to connect the phones by the dongle, as it is this that actually is doing the work in emulating 7.1.
As to the sound quality; well it's good, not great (these aren't top-of-the-range) but more than adequate for enjoying a game environment. The microphone comes through well to other players on multiplayer games, though I'm more of a single-player player, so it's a feature I won't use much but it works well none the less.
The phones themselves are light, with fabric covered cups, this means that you'll be able to finish a two hour gaming session without burning hot ears and a stiff neck.
I thoroughly recommend these headphones to any serious gamer. They work solidly, are comfortable to wear and may help you gain a slight competitive advantage - or at least allow you feel more immersed in the game.