You have a fairly large room and the subwoofer included in the package will probably be inadequate.
Your budget of $800 - 1500 presents the problem that, at $800, its difficult to get 5.1 Speakers + Receiver + DVD Player that would be any better than the Onkyo package in your post. At $1500, you can easily put together the 5.1 Speakers + Receiver + DVD Player that would blow the Onkyo package out of the water.
If your preference is to be closer to the $800 mark, stick with the HTIBs. Audioholics website has a Denon package that rated well.
Denon HTIB Some internet research will reveal other options in the price range.
If your preference is to get the best value for money, you might end up closer to the $1500 mark. If you go down this route, get the following,
Dvd player - Oppo Digital (approx. $200. Get any thats meets your requirements/perference, each player from this company has its advantages)
Receiver - A Yamaha/ Denon/ Marantz/ Onkyo 7.1 receiver in the $400 range
5.1 Speakers - Budget at least $750 for these. Some internet direct brand like, AV123, Axiom, Aperion, etc. For details, this is a whole other discussion...