My DS6 also started with more traditional lessons this fall. It's been great. The teacher was willing to speed things up a bit for him and within his first two lesson he was playing with two hands and reading music. I don't think that watching/listening would have been the right method for him. Even when the teacher talks about music theory his hands are usually touching the keys between her thoughts. He also likes to try out each new concept immediately.
I can't say that he isn't developing an ear for music with this method as he can easily tell me if notes are higher and lower and is even starting to just mimic popular tunes. He even wrote his own song a few weeks ago which started as a humming tune and the lyrics, then corresponding notes and then chords.
I have never witnessed the Suzuki method so I can't comment on it though.
