For a beginner setup for about $400, the Onkyo HTiB units certainly aren't a bad choice. They're quite decent, and easy to purchase.
But you can actually do a bit better for about the same price.
I'd highly recommend going for the
Onkyo SKS-HT540 speaker package . Even though it's the same brand, the SKS-HT540 package includes better speakers than what Onkyo is putting in their current HTiB packages. The speakers are larger and more capable all around. And the included SKW204 subwoofer is actually pretty decent. In fact, I often recommend getting the SKW204 to people who can't afford a $350+ subwoofer. While it's obviously an inexpensive sub, it always manages to bring a smile to my face whenever I hear it. And the Amazon price on the full SKS-HT540 speaker package is just crazy low right now. So I'd highly recommend picking it up! I can pretty much promise you and your parents won't be disappointed. In fact, I think you'll be very pleasantly surprised, and rather shocked at what you get for so little money!
To power those speakers, my top pick would certainly be the
Denon AVR-1712 , but it would put you over your $400 budget by $50. I thought I'd mention it anyway, in case you're ok with going over.
If not, no big worries. Just step down to something a bit more affordable from Denon or Onkyo, or Pioneer or Yamaha. Personally, I'd try really hard to get something with Audyssey MultEQ or another room correction program that EQs the bass. Bass is definitely where you need EQ the most. Many of the less expensive Denon and Onkyo units only include Audyssey 2EQ, which does not EQ the bass, and is not really worth much because of that. So try to avoid 2EQ if you can. That's another area where you can really improve on the Onkyo HTiB units. They all include 2EQ only.
The
Denon AVR-1612 is probably your best choice if you can't afford the 1712. The 1612 will certainly fit within budget along with the Onkyo SKS-HT540 speaker package, and should leave you enough money to maybe get a few cables, speaker wire and banana plugs from monoprice to really complete the setup nicely!
So, better speakers, better subwoofer, better AV Receiver with better room correction. Not bad, eh?
Hope that helps!