Question: Last millenium with the advent of common Stereo equipment, recording engineers often used the stereo effects to re-create a 'stage' like presence in the recordings. I.e. the instruments would be panned to roughly their position on the stage whilst still maintaining a rich listening experience.

These days, stereo effects are more used for enhancing the music rather than trying to "re-create" a live experience.

Is there any scenarios where an engineer/producer should use one method over the other - particularly from a producers point of view?

Answer: 
Try the Effect->Compressor.

> 
> The Compressor effect reduces the dynamic range of audio. One of the
>  main purposes of reducing dynamic range is to permit the audio to be
>  amplified further (without clipping) than would be otherwise possible,
> 
> 
> 

as stated here: <http://manual.audacityteam.org/man/Compressor>
the other thing is to get a mic with a DB meter, so you can choose to record louder for example the SE Electronics condenser mic