As you mention there are a variety of things to look at, your budget will dictate what you should look at, also what do you want to do? Just replacing the old bulky system with a new "stereo" system isn't too complicated, but it is different than upgrading to a surround system that you want to hook up to your TV too. (a surround will play cd's and AM/FM, it also looks after the sound from your video equipment too) So, a little more info, and you should get answers that will be more specific to your needs.
To start you off, if it's just stereo you want, just newer and smaller, you could look at the Linn Classic music. This is a small but high end AM/FM cd player, amplifier all in one nice cool looking package. Not cheap ($2500 Can.) but great quality. Add to this a good pair of speakers and you have yourself a very nice package.
http://www.classik.com/
I still have a big old stereo system from way back in the 80's...it still works! YIKES!
I have been looking around and reading the C-net site, but have no idea what I'm looking for or even what their called theses days...Help!
Do I purchase everything separate or can you still buy the whole kit and caboodle? I know I would like AM/FM Stereo and CD player that holds several CD's, all with great sound. Do the newer systems record on CD's and can you record from the radio/stereo like old cassette players? I've seen watts from 300 to 1200, I'm guessing this matters, but how much does it matter?
Obviously I'm so out of the times, but I'm finally ready to part with the bulky stereo cabinet and the huge speakers.
Thanks!

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