You might want to look at an Axiom setup. A 7.1 setup from Axiom with the EP500 sub will run $3263.25 shipped. This includes their second in line towers, the M-60s, 2 pairs of QS8 surrounds, a VP150 center, and of course the EP500 sub recently reviewed
here.
There's also a review of the
Epic 80 system, which is similar, only with slightly more powerful towers and a less powerful sub.
If you went for this setup, then you'd have a little less than $2k left on the budget for electronics and cables. In this range, you could get the new Yamaha RX-V4600, but not really have money for anything else. However, if you don't need all the extra goodies the 4600 has, a Denon AVR-3805 or a Yamaha RX-V2500 would do well. The only caveat with these two receivers is the fact that you can't really drive the 4-ohm M80Ti speakers (but the 8 Ohm M60Ti's will be just fine). Additionally, if you feel that you want to upgrade and get more power to your setup, the RX-V2500 has excellent preamp outputs that will send good, clean signal to a separate power amp.
The RX-V2500 can be had for under $1000, but since $1k is its MSRP, we'll figure that. So that leaves you with around $800 for cables and whatever else you want to buy. Speaker cable for your setup shouldn't run much more than $100 ($113.08 for 500 ft of 12ga Belden cable shipped from
Westlake Electronic). So now we're down to around $700 for other stuff. If you already have a good DVD player, then that's awesome. Otherwise you could go for something like the Pioneer DV-578A-S, which can be found for about $100 online. It isn't a stellar player, but it's something to get you started and it won't be garbage like a $40 Wal-mart special.
You should also budget a few hundred for room treatments. A few hundred in working the acoustics of your room can improve your sound VASTLY. Check out the article
here.
Of course, these are just ideas. Do you need to get a TV too? Were you thinking about putting in a projector? If so, then then my suggestions kinda fly out the window.
Some other options:
Instead of the EP500 sub, the SVS PB-12 ISD/2 for $899 plus shipping
Instead of the RX-V2500, the Denon AVR-3805, which is going for $700 right now on
ubid.
Good luck!