Is the sound quality an issue with PowerAmp, or all Music apps on your phone? And is this a recent problem, or has it been that way since you got it?
I haven't noticed any sound quality issues with my G2, but you might want to check with other people who have a Galaxy S to see if it's a hardware problem or not. If you haven't taken it to the store yet, they may let you exchange it if it is, or at least listen to another one to compare.
It's possible that PowerAmp is having memory problems if you have a ton of other apps running on your phone; you can try ending those by going into your Settings, Applications, and Running Services to see what's currently running.
You can also try forcing your phone to look for any possible updates; I know the Galaxy S had some problems initially, but they have been fixed with updates, which your phone should receive automatically. But just to be sure, you can open up the Dialer and enter: *#*#CHECKIN#*#*, which will find any updates.
As far as other Music apps go, PowerAmp has the best EQ options, so if those are necessary for you then you might want to stick with that. I personally use and enjoy WinAmp and haven't had any problems with it, though it has no EQ options (yet). But it has decent widgets, a smart UI, wireless syncing, and like I've said, I've had no problems with sound quality while using it, though I'm not much of an audiophile.