sorry i have to be honest, having owned a Neo Geo the sound is awful at least the Amiga has nicer 'composed' music. I would rather play on a CD32 than a Neo Geo, BUT buy both and decide for yourself is my personal advice.
I think it depends on the game... but you need to remember that the NeoGeo games are made for a different market -they're made for the Arcade, so it has to be loud and "in-your-face".
Certainly the NG sound hardware is better than Paula - Paula has 16-bit sound at 22KHz (usually), whereas the NG has 15 channel sound, sampling at up to 55.5KHz (though I don't think all channels can do this). You'd expect it to be better, though - Paula was created in 1984/5 and never changed, whereas the NG sound chip I think came later.
I've certainly never had a problem with NG sound, but I don't think musical compositions are NeoGeo games' strong points, no. If you're going to compare with the CD32, though, you should compare the NeoGeo CD, which of course has CD Audio too (and some great soundtracks).