Is a 12' X 16' room big enough for stereo?

It's proabably built by now, but here goes: a minimum nine foot ceiling would be nice. Two more feet in width would allow more room between the speakers and, more importantly, between each speaker and the side wall. If you could go to twenty-five or twenty-six in length you would have room to grow and would allow for the deepest bass to be reproduced should you go for a subwoofer or a speaker sytem with really deep bass. As it is, the room is a good size. The trick now is to not fill it up with too much furniture and to fine tune the acoustics if you can. At the building stage a number of things, insofar as materials and construction techniques used should be looked at, since they can't be retrofitted very easily. The rest is fine tuning the acoustics with the usual approaches. The fact that you are looking at the interaction between speakers and room is a good idea, but you should, budget permitting, plan ahead for future upgrades of the speakers.