I'd rather a dwarf be assigned to music playing: Over time, their skill with an instrument (Or music in general) will increase. They'd hang around meeting halls or workshops (Perhaps they could be stationed or assigned to one - Putting one in the King's Dining Room would be a nice touch) and would play their music.
Dwarves would get happy thoughts, and maybe a temporary boost to productivity and/or job speed. More musicians would improve the effect, especially if there's a variety of instruments, and they're all of good quality. Singing would be used if there's no instrument available, but I think this should be a seperate skill (Maybe combinable with instrumental skills?) and would be harder to increase, because I don't imagine dwarves to be the best singers - A highly trained singer, however, would produce a better effect than a musician of the same skill.
Bad singers and instrumentalists would perhaps generate unhappy thoughts, creating a sort of conundrum: They can't get better without practicing...
Musicians would carry their instrument around like a miner carries his pick, to avoid unnecessary hauling jobs.
If the increase of productivity and speed with better skill/instruments/musicians is a little too powerful, then perhaps music can rely on a percentage based system, where only critical successes and critical failures increase productivity and speed. If a legendary musician has a masterpiece flute made of adamantite, for example, his chance of success could very will be around 600% - But that just means that he won't produce unhappy thoughts, and has a very good chance of a critical success (Something like a tenth of the percentage chance, so 60% in this case).
That's just what I think, though - Maybe I'm reading too much into it... It could very well be something as simple as extra happiness, but, in my opinion, music is too powerful a tool to be written off as another 'happy thought'.