Mike--I just did up the sound portion of our home theater. I got Infinity speakers (TSS 450, come in silver or black), and a Sony receiver (STR DE698)--and absolutely love the setup. The sound is wonderful, and I especially like that the receiver has full video inputs and outputs for all the devices. So when you select, say, DVD, on the receiver, it doesn't change just the audio to the DVD player, but the video as well. (So many of the receivers don't have this--forcing you to change the audio input to DVD on the receiver, then change the video input to DVD on the TV or some other device.) I spent about $550 total on the speakers and receiver, and about another $100 on wire, connectors, wall plates, recepticle boxes, fish tape, etc. (One nice touch--the speaker set includes all the speaker mounting brackets.) The receiver is technically a 7.1 system, but it can run in 5.1 or 6.1. I was unable to locate speakers in my room for either 6.1 or 7.1, so I just did the 5.1 setup. If you want 6.1 or 7.1, you'd need an additional speaker or two, sold separately (TSS-SAT450). I got all the components during one of the better CircuitCity.com sales this past spring, and all the other stuff came from various home improvement stores.
If you did this, it still leaves you about $350 to get a very nice DVD player...