First of all, I'd like to thank ALL OF YOU for your responses. Straight away I said this will be a challenge

; all I get is yelled at for saying the things you guys are. They don't understand and keep saying "they don't care", not knowing what they don't care about. To me it's a waste of money otherwise, but anyway, moving on...
As many of you mentioned, you think it's best to have the front three speakers in-wall which IS actually an option. First I'd like to say that even though the center speaker is for now a bit of a problem with them, we're working under the assumption that the plan is for it to also be in-ceiling - something I forgot to mention. Next, to be honest what I have no experience with is ceiling speakers and neither do I really want it. That being said, it makes sense to have the front three speakers as close to ear level as possible (as in, I understand why) and that's what was actually planned at first, but, I asked to change it ALL to ceiling only (aside from subwoofer). My logic was related to balance. There are other things but none of them which I can form into coherent thoughts as of now, unfortunately. Try to imagine a sound traveling around and how it would change angles and, possibly more importantly, how the sound itself (the tone) would change considering how radically different the speakers would be. Just imagine music playing like that.. I envision something ridiculous happening, especially if it's actual DTS music tracks. Wouldn't it be better to have all 7 satellites in the ceiling with the front of a bit better potency rather than having a combination of two different kinds? The way the room and the couch is positioned, people sit pretty far back from the TV (which in fact hangs on the wall) and therefore, I doubt it'll sound to much like people are talking from the sky or whatever, especially if appropriate speakers are found.
Another things you guys mentioned was about the holes. We're having a good amount of construction done right now and I don't think it's a problem to undo any holes or make new ones. The holes that have been made right now are just for the speaker wires; sorry for not specifying.
Let me see if I have this straight: They want surround sound, but they don't like speakers?
Some observations:
> For movies, a centre speaker is
very important - it's where most of the dialogue comes from.
> In-ceiling speakers are not a very good option for the left/right front and centre speakers. In-walls would be better, because of the directionality of frequencies from about 80Hz and up. While you'll be watching the picture in the horizontal plane, the soundtrack will seem to be coming from the sky.
> Commercial in-wall subs tend to be more expensive and lower-performing than stand-alone subwoofers (if you build it yourself, it can be made as good as you want it to be). Plus, all the ones I've seen are passive, meaning they require a separate amplifier, i.e. another component to put in the stand. If you look around, you could find one with an integral amp - I just don't know.
> They've already drilled holes? For what - the wiring or the speakers themselves?
> If, by "around a 6" diameter", you mean the drivers, then yes that would be accurate. If you mean the whole speaker enclosure, that would be a very small driver and resultant poor sound. You should expect the outside diameter of the whole assembly to be a
minimum of about 8".
> You say the receiver is a Yamaha, but they make cheap, low-performance models as well as some of the best ones available. So, I have no idea if you have a good one or not. What model is it?
> I get the impression that you have a steep learning curve ahead of you. There are many very informative articles on the Audioholics website, so I suggest that you do some more research before going any further. Then, if you still have
more specific questions, you're welcome to ask.
To what I haven't answered above, to the points in general, yes, I understand

For the most part, these aren't my understandings. I've told my parents pretty much all of what you mentioned above. I personally see speakers as a beautiful thing and have absolutely no need to hide them in plain sight... Thanks for the reassurance though, lol.
About the driver vs. diameter thing though, thanks for telling me. It's what I thought... To be honest, I didn't want to throw everything as my parents' restrictions which I ended up conforming to. That's another thing I'll have to make clear to them as something not up for discussion if they want what they're asking for.
Hi David,
Welcome to the forum.
How did "nothing on floors" translate to "in the ceiling...except for the center"?? Why not in walls (not ceiling) for the L & R as well? Is this an LCD wall mounted TV situation? If so, why not "on-wall" LCR's around the display??
Which is where exactly?
Speaker or wire "holes drilled"??
Seems like you may be saying that the speaker holes are already cut in the ceilings, in which case it may be too late for other options. Is this correct?
What size sub can you fit between the wall studs? Or would in ceiling subs be preferred?
cheers,
AJ
For the full answer to that, take for reference what I said up in the beginning of this post. For short though, lol, subwoofer in the ceiling? That sounds cool and interesting but, that's alright - a regular sub will do. Or actually, in this case, in-wall. I'll search for a regular standing sub later after they waste money and realize their error, because apparently the argument that they don't want a huge box standing in the corner where nothing ever even goes beats all logic.
The holes are just for the wires and can be remade wherever - the front wall included, though there is some confusion on my part about that, also mentioned above.
Also, yes, the TV is wall-mounted.
I'm in the process of looking for a new home and I see front channel speakers in ceilings all the time in new homes built by developers. I also see a lot of pre-wiring for TVs above huge fireplaces that make you basically watch TV looking at the ceiling the whole time and who knows how many of those TVs are killed by the heat of the fireplace.
It sounds to me that you've already drilled holes in the ceiling for the speakers. Is it too late to get the drywall guy back?
It isn't too late. Sorry for the plethora of information but for a better idea, you should read the beginning of this post. Thanks
I can tell you firsthand that in-ceiling speakers for HT will sound terrible as I've heard such a system before. It will be even worse without a centre channel. My advice would be in-walls for L/C/R and if your parents are dead set against in-walls, I have seen ceiling ones that flip down on an angle when in use, but I don't know who makes them.
I can imagine it will sound bad, or at least nowhere close to a proper setup, which I certainly consider this not to be. The first thing I said when they started thinking about showing off and having "comfortable sound" and mentioned that idea of ceiling speakers is, "It'll sound like crap." That's for your and my standards though... They apparently care less about that and just want the best out of whatever is left after the sacrifices.
Maybe you've already read it, but to better see what's up with the setup in the front, look through the beginning of the post that's before the individual responses.
The budget might still be too low for what they want. Speakercraft makes motorized in-ceiling speakers that drop down then point towards the listener.
For the 6" holes, check out the Mini 5.3.
$500 for an in-wall subwoofer will be crap, anyway. You can check out some of the in-walls at PartsExpress for under $200. You'll need an additional amp as most powered in-wall subs cost way more than $500. Do NOT be tempted to buy subs from Monoprice. This is one case where I'll say skimp on or really skip the sub until your budget allows for something more.
Speakercraft does offer in-wall subs, as well. Here's their Time 2.1 package.
The price is $3k though---50% more than your budget.
I will check those links out promptly, but just to mention a few things before (other than what's at the start of this post), unfortunately, $2000 is definitely the limit. Even I think that's a lot (in general; I don't mean for all this fancy in-wall/in-ceiling stuff). The parents don't understand values in this area at all, so they would very likely see $3000 as ridiculous. Speakers that drop down though - very interesting! I'd only want them to drop down 2-3 feet though but that'd certainly make the sound better. They might like the concept too, for the aesthetic values...
Budget and sound wise, a regular subwoofer is more necessary that I thought. It was obvious to me even before, but thanks for that info.
EDIT: Even my grandfather understands that a subwoofer shouldn't go inside the wall by any means. There is hope yet. Maybe to make things a bit easier, an appropriate regular sub can be searched for instead.