In a 9x9 room, there's no reason for tower speakers, or for that matter, large bookshelves. You can get by with something like HSU's Ventriloquist setup, and an HSU STF sub, along with an Onkyo 605. That system will blast you out of a 9x9x8 room (648 cu/ft).
You can get great 14ga. speaker wire in the automotive dept. at Walmart in 50' runs for under $12, and very good quality component cables at Home Depot for under $15.
HDMI is used to connect a DVD player or HD cable box to your receiver, and another HDMI cable from your receiver to your flat screen HD tv.
Take the extra $900 and buy yourself a new Olevia 37" flat screen LCD and HD DVD player from Buy.com or Amazon.com
HSU Ventriloquist 5.0 $299
HSU STF-2 $349
Onkyo 605 at JR.com $399
Cables $50
Total $1097