There is debate about the nature of the dorsal auditory processing stream. Some folks, Josef Rauschecker in particular, argue for a dorsal "where" stream, whereas others, Hickok & Poeppel and Warren et al., argue for a sensory-motor integration (sometimes called "how") stream. Here's why the "where" hypothesis can't, in principle, be right.
Spatial information associated with an auditory signal is a stimulus feature much like pitch. We don't talk about a "pitch stream" however. Why not? Because pitch (frequency) is just a cue for any number of processing goals. Pitch information can cue phonemic identity, speaker voice, auditory stream segregation ... even sensory-motor goals (humming back a tone). Spatial cues are no different in that they can cue explicit location judgments, auditory stream segregation, and any number of sensory-motor processes (head movements, saccades, locomotion toward or away from a source).
Processing streams, I'm suggesting, are defined by goals or tasks -- what the information is used for -- not by stimulus features. Sensory-motor integration for vocal tract actions defines a goal -- control of the vocal tract -- and therefore is a viable candidate for a processing stream. Identifying the meaning of an auditory object is also a goal and a good candidate for a processing stream. Stimulus features, like pitch or location are not goals, they are just cues that can be used within various task-driven processing streams.
Of course, this doesn't imply that there isn't a specialized location processing system in the brain that uses interaural time and level differences to compute spatial information. Almost for sure there is (my guess is that it's subcortical), just like there is a system that processes pitch using frequency information. But we shouldn't confuse a specialized feature processing system (area) with a cortical processing stream as the notion "stream" is typically used.
Which reminds me. It is probably time to redefine the notion of a processing "stream". In particular, I think the dorsal-ventral distinction is getting tired and has now outlived its usefulness. I'll expand in a later post...
Hickok, G., & Poeppel, D. (2000). Towards a functional neuroanatomy of speech perception Trends in Cognitive Sciences, 4 (4), 131-138 DOI: 10.1016/S1364-6613(00)01463-7
Hickok, G., & Poeppel, D. (2007). The cortical organization of speech processing Nature Reviews Neuroscience, 8 (5), 393-402 DOI: 10.1038/nrn2113
Rauschecker JP, & Scott SK (2009). Maps and streams in the auditory cortex: nonhuman primates illuminate human speech processing. Nature neuroscience, 12 (6), 718-24 PMID: 19471271
Warren JE, Wise RJ, & Warren JD (2005). Sounds do-able: auditory-motor transformations and the posterior temporal plane. Trends in neurosciences, 28 (12), 636-43 PMID: 16216346