I tested a lot of the music apps for Android today because I was so fed up with the crappy sound quality. The newly leaked Motorola music app has damn incredible features, but same bad quality.
I think I finally found what I've been looking for with the Poweramp app. The sound quality is easily a league ahead of every other app I've tried, it supports pretty much all major lossless and non-lossless formats, editing of ID3 tags, has a decent EQ if you care, and a decent interface. Scrobbles too. The only thing I see that they really need to add is retrieving album art online. The widgets are pretty nice and integrates well with the Liberty rom I use.
The bad news is that the free version only has a 15 day free trial and the pay version is $4.99. I'm fairly convinced though that I will be paying for it since its the only thing I've been able to enjoy my music with on this phone since I bought it.