Here's a link to a recently published article about 'what' and 'where' auditory pathways. It seems that pathways that carry messages about what sounds are are at least partially separable from pathways carrying information about where sounds are coming from.
Children or adults with auditory processing disorders are often seen as being 'strong visual learners', or worse, thought to be slow (miss auditory information a lot), 'ADD'-ish (auditory attention is worse than visual attention), or on the autism spectrum (difficulty understanding the musical, emotional content, or other associations of speech). Because verbal teaching is the dominant style in school, students with undiagnosed auditory processing disorders are particularly at-risk.
Sometimes auditory processing disorders run in families, but auditory pathways are also quite vulnerable to injury with prematurity or even mild birth injury.
Central auditory processing disorders are difficult to diagnose in very young children, but it's important for peripheral hearing to be tested in even very young children. Children with even mild hearing loss are at significant risk for failing at least one grade in school.