The problem with AC-3 these days is that nobody has manufactured an AV receiver that will accept the raw signal in probably a decade or so. Therefore, most people need an RF demodulator or something similar to convert it to what is now considered a "standard" Dolby Digital signal. I use a Harmon Kardon box that converts AC-3 to six line level inputs which then go into my reciever.
The upgrade is huge, btw. The difference between Dolby Digital and Dolby Surround is VERY significant, even if the number of DD titles isn't.