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

I owned a pair of Theil CS.5's in a room almost that exact size (if memory serves), it was in the bottom of a split level house so the floor and two supporting walls were concrete. It worked fine in that room, in some ways better than others, but bigger probably would've better. The main problem was there just wasn't much room for experimenting with speaker placement. For example, the Theil's (like many speakers) need to be out from the walls a good deal and you won't be able to get it "perfect" like Theil recommends. 4'-5' from the side wall (to create a crude 4ms delay) for each speaker will only leave you 4 feet between the speakers which isn't good for the soundstage. But there has to be a minimum of 2' from the sidewalls. I ended up with mine a little under 2.5' from side walls with 7'+ in between the speakers. As far as the rear wall, 3' out worked well, and the difference I found between 2' and 3' out was dramatic (at least I thought so at the time), after 3' the law of diminishing returns kicked in. Not to mention the different distances (2.5' and 3') helped prevent certain acoustic problems that could exist in the room. The one plus for a room that size is it will reinforce the low frequencies, something Theil's have always been a little shy on. And you'll never be sitting to far away so they'll play pretty loud.
A little bit of acoustic treatment in a room that size wouldn't hurt and might be worth it. Just the RPG pro foam level I at the first reflection points and the middle wall between the speakers should be enough, if any, or if you have some nice pictures to put there use those. But a 12' by 16' room is big enough to do the job well with some time put into things.