Ln46A650+ bluray

If possible I would like some advice in purchasing the three key pieces to a home theatre. I will be purchasing the ln46A650 possibly. What bluray player would match this unit well. The CNET review states the TV did a good job of up converting standard dvds. Is it important to concern myself about the bluray players ability to do this when the TV does a really good job of it. The players being considered are the Samsung bd-1500, Panasonic bd-55 or possibly the new Memorex player. I also have an issue with the sound. My current receiver which is a Sony STR-DE597 has 5.1 analog inputs and no HDMI. Is it worth the extra cost to purchase the bd-55 which has 7.1 analog outputs or purchase a new receiver. If a new receiver is the way to go, which would be the best one for a budget under $500.00. I am looking at the Onkyo SR606 and the Yamaha RV663. In the review it states the SR606 is not very good for music, we listen to music 20-30 percent of the time. I also have a question about how audio processing works, if the receiver is capable of only 5.1 analog and the track is 7.1, can you set the player to output 5.1 or how would that work?