Every recording I hear these days from people with home studios is flat, and lacks depth and dimension. It's the preamps, and likely the converters as well.
I don’t think it’s possible to narrow it down so specifically. It would be nice if that was the case, as it means the problem can be solved by buying equipment. Sadly, I think the acoustics, instruments, arrangements, mic placement and engineering/mixing are bigger factors.
If high-end pres didn't make a difference, then why is there such a HUGE market for them?
There are a few reasons.
First, some preamps have useful features like phase, versatile high pass, stepped gain which helps recall, ‘over’ limiting etc that you don’t find on the average desk channel. Others are complete processors with a comprehensive set of EQ/Compression. Some have built in converters of good quality.
Second, some specialised preamps are very quiet, which is nice for certain types of recording, but not a lot of use in a typical pop/rock setting.
Third, some preamps are designed to distort and change the sound in interesting euphonic ways. They often have weird anomalies in phase and linearity, but sound ‘good’, particularly when driven hard. The Groove tubes Vipre epitomises this.
Are these preamps nothing more than snake oil being sold to fools?"
No, they have their uses. I’m not arguing that a preamp cannot have a ‘sound’, I’ve built valve/transformer ones myself that have a very strong flavour to them. However, the more coloured the preamp, the less versatile it is, which is why the built in ones on soundcards are as clean as possible.
What I am saying is that if you take two modern preamps that are designed to be as inaudible as possible, the differences are surprisingly subtle, and if there is an obvious difference, then one is broken. You really have to do well set up tests to confirm this yourself.
There was an interesting (though not particularly scientific) test once where a guy built a preamp for $5, and compared it to a number of other preamps. In a blind test, it was considered to sound the ‘most expensive’ compared to a UA LA-610 and a Behringer.
The interesting part that must be remembered here, is that the $5 preamp was actually a very advanced, expensive preamp! It used a TI Burr-Brown INA217 at it’s core, which represents a cost to design and manufacture way beyond what a boutique mic preamp company could afford. Of course it is then cheaper in bulk, but that does not mean it has to sound cheap.
If you combine that with a good power supply, it’s really not a bad preamp. Use battery power and ultra minimal circuitry and you have a pretty good one! The last forty years of analog IC design have not all been in vain!