There’s actually two separate issues here.
When set to Stereo Mode, many sounds do indeed only get emitted from one speaker and this appears to be a game client issue.
However, the distortion that occurs when the headsets are set to Surround Mode is a Logitech driver issue. Many people have experienced this problem outside Guild Wars 2 and there’s been much success with installing older drivers (particularly those released before the headsets were included in Logitech’s Gaming Software). This is well documented and there are links to older driver versions housed on the Logitech site that “work around” the issue, particularly for G35 users like myself.