It's a perfectly valid question. On one level, there is a finite amount of data on a CD, so in theory there is a cap on how good one can sound. However, it's a hell of a lot of data in actual fact, so isn't as limiting a factor as you might imagine. There was a time when high end audio was about reproducing the original sound as accurately as possible, the so called "audiophile" route. However, for someone like myself, it's about the music at the end of the day, rather than implicit sound quality. A fair few manufacturers are now following this route of producing "music" rather than something that is neutral and sterile.
Yes, there are some disks I have that are going to sound crap (quality wise) through a really good system, but most of them sound pretty poor through my current system as well, so there's not really any loss there. However, a number of recordings I have take on a whole new level of enjoyment when you get to hear everything that's there. A number of disks I have that I had marked down as "muddy" or poorly recorded have really come to life when played on higher quality kit.
So whilst CD has a finite limit in it's information storage, unlike say vinyl, most systems at the moment don't give you all of that information when you play CDs on them.
Not sure that answers the question, but hey.
With regards to ultra-high quality recordings, I've never really found that to be a problem. It's more a case of how good the original recording was rather than the format it's produced on. There are vinyl releases of albums that sound far worse than their CD counterparts, simply because there wasn't the same level of time put into the production (one doesn't simply put the same source onto CD and vinyl, you tend to remaster music for one, then the other). I guess I'm kind of fortunate in that with the odd exception, the bands / musicians that I really like put a hell of a lot of effort into producing a good recording. I've listened to small smatterings of the current X-Factor generated detritus, and despite some incredible recording facilities / engineers / budgets etc. they all tend to sound rather flat and insipid, not counting any comment on "musicality" (whatever that actually is
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