Speakers would be first, seeing as your TV is nice enough. Wait until it dies
Axiom seems to have a good bang for the buck:
http://www.axiomaudio.com/products.html
SVS also has some speakers going for it, however, they are for the time being, more regarded of having very nice subwoofers:
http://www.svsound.com/
HSU also makes highly regarded subwoofers:
http://www.hsuresearch.com/
Paradigm also makes good speakers:
http://www.paradigm.com/en/paradigm/news/
ERA makes very small profile, but great sounding speakers. Great Bose killers
http://www.signalpathint.com < site seems to be down
Blu-Ray seems to have won the format war, and being said, the PS3 is considered the best Blu-Ray player. It will also play other formats and upconvert DVD's if I'm not mistaken.
Oppo makes good upconverting DVD players on the cheap:
http://www.oppodigital.com/
Reciever wise, you might be content with 5.1.
However, the Yamaha RX-V663 is a promising little reciver that's about $550.
The Onkyo TX-SR805 is also a good choice, considering it's a little more than the RX-V663 and has more power. (HDMI Might be a little sketchy though on the 805).
Your room would probably benefit from acoustical treatment (tile floor, sliding glass door, tall ceilings and arches can make the sound echo in strange ways). Cheapest and easiest thing to do, is make sure that no clutter is around the HT area and lay out everything as geometrically perpendicular and parallel as possible (seating position, speaker angles, TV placement).Then you might try to put rugs on tile or wood flooring. It may look strange (if you love looking at a tile or wood floor), but it will absorb sound reflection that could echo somewhere else. Soft, thick fabric curtains hung above your sliding glass door will help that area of reflection also.
If you have time and some foam (
http://www.foambymail.com/Eggcrate.html), you can just start putting this in different places and see what a difference it makes. I would try to put it on arches (depending on where it was), sharp, hard corners of the room, and anywhere behind the listening area. It will take time and a lot of experimenting, but you can achieve good results.
Lastly, you can call a pro and he'll do the work for you.