One note to add to mcgeedo's post. The users player has to be dolby digital capable to use the automatic analog option. For example: if a DVD is ONLY DD5.1 encoded, but there is no DD5.1 deocder attached to the player the chipset will downmix the 5.1 bitstream and send it out the analog ports as 2 channel stereo. However, it is a dolby digital capable player that makes that possible. If your player is not dolby digital capable you will not get the automatic 2 channel stereo out the analog ports. There are a lot of people that just have their DVD player connected to the TV. Most TV's do not decode dolby digital. Dolby knows this and included the auto downmix into their chipsets.
"Can I have my audio play in Stereo and then sudenly have it switch to 5.1?"
It depends on what you mean by 'suddenly'. If you mean, 'Can I have one segment of video play with 2 channel, and another with 5.1 SS?', then the answer is "yes". DVD-A supports only a single audio stream (the dvd spec allows for up to 8 separate streams), and within any particular stream (stream 1 in this case, because you can only have one), the audio type and bitrate have to be identical within a specific title set. DVD-A can create multiple title sets, so different audio streams would result in DVD-A creating separate title sets, allowing you to have different audio types in a single project.
If you mean 'Can I switch suddenly from 2 channel audio to 5.1 SS associated with a single video file?', the answer is "no". Hollywood dvd's often allow the viewer to choose from a number of audio formats (DTS, 5.1, 2 channel ac3, etc) when watching a specific movie. The viewer can do that because the main movie has multiple audio streams associated with it. DVD-A doesn't support multiple audio streams, so the only way you could offer the viewer a choice would be to duplicate your video and have one with 2 ch and the other with 5.1. Obviously, if the video is reasonably long, that is not practical because it would take up too much room on a disc.
ReelDVD (as derg referenced) allows for multiple audio streams (up to the spec max of 8). Therefore, you can have a 2 channel option in one stream, and 5.1 in another, a different language in another, etc. ReelDVD creates only a single title set, and for that reason, once you choose a specific audio type for a stream, all the rest of your video assets have to have the exact same audio type/bitrate in that particular stream. For example, if in the first stream position you had a 2 ch ac3 file @ 224 kbps with one video clip, all the rest of your video clips would have to have 2 ch ac3 files @ 224 kbps in the first audio stream. You could have mpeg audio, wave, ac3 at 192 kbps, etc at the stream 2 position, but you could not alter the first stream unless you started over. Once you pick the second stream audio type/bitrate, then all the rest will have to match as well, and so on.