Better for around $300:
Pioneer VSX-520-K - Just came out, has HDMI 1.4 which supports 3D content. If you wait until June the Denon AVR-391 arrives at with its MSRP set at $249. They Denon will offer HDMI 1.4a (newest consumer version of HDMI, and will be sure to support return audio from an HDMI 1.4a equipped television's HDMI port. The Denon will also offer a little more gusto for home theater. The VSX-520-K sits just $30 shy of the Denon at $229.
Insignia 5.1 Sub/Sat system - Decent subwoofer and good quality satallite speakers for the price. Commonly goes on sale for around $100 and sells at regular price for around $150. The system definitely sounds, looks, and feels better than it's dainty price tag suggests. I challange Sony, LG, or Panasonic to compete favorably to it with their HTIAB systems costing $500 or more.
If you don't have a DVD player, one can be had for cheap just about anywhere. If you have a PS3 for your games, you don't need a DVD player. If you have a 360, it will play the DVDs of course, but it will be a little noisy while doing it.