I have been reading about NRPN's and how they allow higher resolution control of MIDI parameters (14-bit with a range of 16,384 values instead of CC's 7-bit with a range of 128).

On my Yamaha AN1x, I have noticed that the eight knobs are very 'steppy,' whether they are controlling the internal synth engine, or parameters on a softsynth like Sylenth1. I guess this is because they only transmit 7-bit parameter changes. I compared this to my Akai Miniak with 12-bit encoders which have much smoother operation.

Is it necessary to use 14-bit NRPN's to get smoother parameter control (in software or hardware) from MIDI controller knobs? Or can software interpolate between the 128 steps of regular CC's so that the steps are inaudible?

Lots of Midi CC's can be used in 14bits as well. See http://www.midi.org/techspecs/midimessages.php#3 CC's 0-31 are MSB, 32-63 are the LSB for the same control. With the exception of filter cutoff freq, 7 bits / 128 values is enough for most synth parameters.

I guess that cause of the steppy nature of your knobs lays in the AD converter used to read the position of the knobs. Or maybe it's the firmware: that has to figure out weather it's reading noise or an actual knob movement.

First I'd use a midi data monitor (eg MidiOx) to see weather your knob values (when moved very slowly) are coming in in big steps or not.

I followed your suggestion and used MIDI-OX to monitor a slow knob sweep on the AN1x. When I turn it at a moderately slow rate, the values change in increments of 2-4. When I turn it at the slowest rate possible, it still randomly skips values. It is possible to increase the resolution by pressing the knob while turning it, but this limits the range of the knob and does not prevent skipping values at reasonably slow turn rates.

Does this indicate that it is a problem with the AN1x knobs that is causing the steppy sound? Do knobs normally sweep through all of the values 0-127?

I have read that parameters like pitch bend, pitch fine adjust, and filter cutoff benefit from higher resolution control. Would you recommend using 14-bit knobs for control of those kinds of parameters?

I never payed that much attention to it, but on some controllers missing some values is business as usual alas.