Movies or music? Which do you enjoy more at home?
Before buying any audio equipment, first determine whether you're going to mostly watch movies or listen to music.
Yes, it might seem reasonable to expect that a home theater system will automatically sound equally good with movies and music, but that's not easy to do. With speakers especially, the difference in performance requirements is significant.
And though there are some specific models from Klipsch and Dynaudio that are adept with both forms of entertainment, most speakers skew one way or another. For music, overall sound quality is the top priority, for home theater it's more about clarity and the ability to handle the extreme dynamic range of special effects such as explosions.
For maximum home theater thrills you'll need as much power as you can afford, a potent subwoofer, and speakers that perfectly blend with said sub. With home theater your attention is focused on the picture; sound plays a supportive role. As long as the receiver and speakers don't overtly distort when they're playing at the volume level you want, and there's enough subwoofer bass to make special effects come alive, it's mission-accomplished time. Achieving reasonably good home theater sound isn't all that demanding from an equipment point of view, but careful speaker setup and room placement are crucial for best results.
Small- and medium-size satellite speakers, bolstered by a good subwoofer, are just peachy for home theater, but for more musically oriented systems, forgo the subwoofer and redirect that part of your budget over to larger and better quality front left/right speakers. Buy the least expensive matching center and surround speakers to complete the system.
Since we've eliminated the sub the L/R speakers will supply most of the bass, so the power demands on the receiver will be higher for musically oriented home theaters.
Or forgo surround entirely and just stick with. Remember, music systems don't have the distraction of visual image to supply a reality aspect to the sound, the sound must draw you in all by itself. That's why focusing your budget on two channels makes it easier to maximize sound quality of the speakers and stereo electronics. It's also easier to place a pair of speakers in your room than dealing with the clutter associated with a sub, and five, six, or seven speakers and their wires.
I'm not suggesting stereo is automatically superior to multichannel home theater, just that it might be a good alternative for buyers who listen to music more than they watch movies. And if you rarely listen to music over your home theater, 5.1, 6.1, or 7.1 systems make more sense.