In order of how I would upgrade things...
Depending on your current TV, I would either upgrade the TV or the speakers first.
Not sure your current TV, but if it is pretty bad, then a C2 would be a great choice and would immediately show a drastic improvement to the video.
But, then it is speakers.
I say this from first hand, personal experience. I started off with some lesser expensive kit speakers and enjoyed them with my cheap Kenwood AV receiver. It was a big improvement on what my TV put out and was nice. But, I ended up ordering some new speakers and a new receiver. The receiver was about a month delayed in arriving so I got the new speakers early. So, I installed them with my cheap Kenwood.
Wow.
That is all I could say when they were installed was 'Wow!'. The jump in audio quality was enormous. I was not only getting more clarity and detail in the sound, but the jump in volume in the room, with my cheap receiver, was astounding. It was a massive jump in performance. I had added a much better subwoofer as well, and that did its duty, but has since been upgraded to a 18" subwoofer.
A month later and my new AV receiver arrived and was installed. I spent a fair bit on a well respected high end model. The Yamaha RX-Z1. In all seriousness, I didn't find a massive improvement in the audio at normal listening levels in the room. It could go louder, quite easily, but I didn't listen that loud almost ever. So, at normal volume levels it was a minor improvement to the system despite the cost and high end features it delivered.
So, I would lean towards getting a TV first, and speakers second. You may want to try upgrading that subwoofer depending on how much bass presence you want in the room, then do the receiver last as budget allows.
If you really are happy with your current speakers, then almost any modern AVR will do, and Accessories4Less is a great way to save some cash.
The factory refurb Yamaha V4A is only $350 from them and it works really well for a nice 5.1 setup...
Yamaha Factory Refurbished
www.accessories4less.com
The V6A at $500 offers more HDMI connectivity and 7 channels of built in amplification. I think it hits a really sweet spot for features/performance/quality for the money.
Yamaha Factory Refurbished
www.accessories4less.com
You listed a $500 target, and the V6A hits it.
But, I would get the TV first because you can use that with your existing setup and get quality audio all around. Upgrading to a system that supports newer audio formats can seem really nice, until you realize that your speakers may not be capable of delivering a huge improvement to the audio quality and your ears still may not be able to hear that difference in the first place.