Both wall and ceiling speakers have advantages.
Surround sound speakers can be an intricate part of the home theater experience, most significantly because the physical locations of the speakers help create something like a realistic theater experience. Whether your speakers are in the ceiling or in the walls, the surround-sound speaker system is exponentially more realistic than the average two-speaker setup. There are some significant differences between ceiling and wall speakers, however.
Direction and Permeation of Sound
Ceiling speakers project downward, wall speakers outward.
The most noticeable difference between ceiling and wall speakers is the direction of sound projection. When the speakers are mounted in the ceiling above you, the sound generally disperses about the room more thoroughly. Wall speakers, by contrast, mostly project in the direction that the speaker faces, leaving much of the "surround sound" experience to be created by the sheer number of speakers that you have instead.
Subwoofer
It is important to keep in mind that, regardless of what kind of surround sound system that you install, your subwoofer is almost always going to be located on the floor, probably somewhere behind the screen, in its own unit. The subwoofer, in fact, is responsible for creating much of the sound system's imposing qualities; the speakers in the walls or ceiling are responsible for creating higher frequency noises like voices. Don't plan on creating earthquakes with your ceiling speakers, in other words, because that effect is created by the subwoofer.
Insulation
Insulating your speaker is vital to its performance.
One common problem you may run into with your surround-sound speakers is the issue of insulation. While with ceiling speakers, unless you live in an apartment with upstairs neighbors, insulation is generally not much of an issue (since the majority of the sound is either projecting down toward you, or upward into the ceiling), wall-mounted speakers can leak sound through the walls, perhaps disturbing neighbors.
Aesthetics
Generally speaking, ceiling speakers are much more subtle than wall speakers, simply because there is less chance that you are going to see them. Since the speakers are tucked away into the ceiling above you, the speakers remain for the most part out of your line of sight. Wall speakers, on the other hand, will almost inevitably need to become part of your living room decor.
Repair
As you can imagine, ceiling speakers are much more difficult to repair or perform any kind of maintenance on than wall speakers. Not only do you need a ladder any time you are performing maintenance, but you will also need to become comfortable with working with the unit directly above you.
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