[quote name='yesiamaplant']Now I know that as soon as one mentions they were a salesman, most people call bullshit and stop listening, so I don't blame you if you skip this. I sold TVs and Home Theater for about three years back in the day. Most of what I knew then still holds up today, so I thought I'd define some terms for you.
Basics Components
Receiver - This is more or less the brain of your audio system. It is largely what controls (or houses what controls) everything from volume and input selection to whether or not you'll be using DTS or Dolby Digital. It also houses the amplifier, which is what normally powers your speakers. What you want to look for is something with plenty of inputs, that can decode at least DTS and Dolby Digital.
Speakers - I'm assuming you know the basic function of these guys. The speakers normally take care of your mid and high range sounds. A 5.1 set-up (the baseline of home theater at the moment) will have two in the front, two in the rear, and one "center" speaker. The rears are typically used for ambiance and limited effects, while most of your action will be produced by your fronts. Almost all dialog comes from the center (which is why it's normally resting under your TV set, but people are known to get creative). Despite what Bose tells you, tiny speakers do mean tiny sound (I'll cover them in a sec), so I would recommend you get these as large as your aesthetics will allow. Especially the fronts.
Subwoofer - This is the .1 in 5.1. It comes in two varieties for your purposes: Powered, and Passive. Powered means it houses it's own amplifier, and as a result can usually create a bigger boom. Passive means it feeds off the amp in the receiver, and so it tends to be weaker.
Bose - While they sure do look pretty, we don't look at audio, we hear it. Bose setups will sound nice at first blush, but before long you'll notice that unless it's a high frequency sound, it's distorted and mushy. The cubes cover only high range sounds, while everything else is crammed into the LFE. Their LFE isn't really a subwoofer. It's more like it's own amplifier. Imagine a soprano opera singer hitting the high notes really well, and everything else sounds like it's coming through cotton. This is just my opinion of course, and judging by their sales figures I'm in the minority.
Cables - At the moment, the two real choices for cables are Optical (TOSLink) and HDMI (there's another one called Digital Coax, but it's typically thought of as an inferior connection and most devices don't use it anymore). Optical is audio only, and most receivers will have at least two of these on them so you can hook in multiple sources. HDMI is that Video cable you probably bought to hook your PS3 up to your TV. Well, it carries audio too, and just as well as the Optical cable at that. "But if I hook the PS3 into the receiver, how do I get it back to the tv?" you ask?
Video Switching - An often overlooked feature of a good receiver, video switching makes it awfully convenient to have several things hooked up at once. ESPECIALLY when your receiver has HDMI switching. Really keeps the amount of behind-the-tv cable clutter down.
Now my recommendation for you is:
HTIB (Home Theater in a Box) - A perfect starter system, and generally cheaper than getting everything separately. What you sacrifice in sound quality and flash you make up in convenience. Some come with a DVD player built in to the receiver, which I would recommend against, mainly because they tend not to give you additional inputs for hooking up things like your 360 or PS3, and more often than not they don't do video switching either. Others (like my choice below) are just a receiver, speakers, and everything to hook them up in a small to mid-sized area.
http://www.us.onkyo.com/model.cfm?m=HT-S3200&class=Systems&p=i
That's the more current model of what I have (wish I'd waited a year for the HDMI inputs, but I got a good deal). Sure I could have spent a couple grand putting together something nicer, but after all those years of building stuff for other people, it lost it's allure for me. Onkyo makes a good product, especially when it comes to HTIB, but there are cheaper alternatives out there. Good luck.
EDIT - WIRELESS SPEAKERS
I didn't see that post above about wireless speakers. I wouldn't do it. They sound like crap when compared with wired stuff. If you don't want wires, you don't want surround sound.[/QUOTE]
The specific model he mentioned here is available as a refurb for $130 cheaper than the retail price.
http://shoponkyo.com/detail.cfm?productid=HT-S3200&modelid=90&group_id=1&detail=1&ext_war=0