From a purely hardware point of view, I doubt anyone could seriously argue that POKEY is better than SID for music. SID is a proper synth on a chip - several different waveforms,( esp. sine), hardware ADSR, 3 (or 4?) 16 bit channels, filters.
POKEY limited to (almost) square waves, 2 channels of 16 bit sound (but 4 of 8bit), awkward filter.
It has been argued by some that POKEY is more effective for sound fx. the "distortion" effects certainly lends itself to some interesting noises, and it can do them on any channels at same time, whereas SID only has one channel for "noise".
POKEY came out 3 years before SID, in 1979. The 610 was also realeased the same year as the C64, by my googling, in 1982. So it has nothing to be ashamed of! POKEY was also used in many Atari coin-ops (but sometimes in conjunction with other sound chips), but I don't know if any were from before 1979.
Still, people have done amazing stuff with both chips. Like any instrument though they have their own unique sound, and strengths; things each is better suited to.
Best place to hear what's on atari is the
SAP archive, which was inspired by the Hi Voltage SID collection of tunes (link on the site to that). There are a hell of a lot of tunes you can compare there!
I always liked Warhawk tune, as far as games go. It is similar quality to the C64 version.
You're right that demos have the best examples of what's possible. Check out the Numen demo (not just for the sound). The Taquart guys sure know what they're doing. Sorry can't find the link right now. There were some posts about it here about a month ago though.