If the extra cash isn't a big deal, then I'd go with the 354 (I'm planning to upgrade to the either one of those as well - prolly the 254...price is an issue for me.
At a glance the differences are:
254: 50W x 7 channels
354: 75W x 7 channels
254: Mini jack input for iPod® audio playback
354: A/V playback, control & charging for all iPod® models with docking connector including iPhone™ & iPod® touch
254: 2 assignable 100 MHz component video inputs
354: 3 assignable 100 MHz component video inputs
254: 6 digital-audio inputs, 3 coaxial/3 optical
354: 7 digital audio inputs, 3 coaxial/4 optical
254: Multiroom assignable rear amps & preamp outputs & discrete IR codes
354: Multiroom assignable rear amps & dedicated preamp outputs, discrete IR codes, Zone II remote
With the extras you get, seems like a bargain if it's just $130 difference!
