Technology War
I recently upgraded several pieces of equipment and I really struggled to select a DVD\CD player. I decided to go with a very affordable Denon 910 and wait out the techology war for SACD, DVDA, HD DVD, and Bluray.
It seems Sony is winning this technology war and hopefully we should see Bluray units and DVD's out this Christmas. If you need a unit now, I would get a lower priced unit and wait to see what technology wins. Either one is bound to have a killer audio solution that will make SACD and DVDA eventually crumble.
As for budget, I would set money aside for a nice remote that the other half can operate easily, GOOD surge suppression\AC line noise isolation, OTA antenna and cable, telephone and network cable, lighting and switches suitable for the space, furniture\audio rack or like, sound attenuation (curtains, rugs, sound panels) and all sorts of things that pop up that you do not appreciate until you encounter them.
Now is the time to make sure that you cable and power everything for now and the possible future. It is not fun tearing new holes in the drywall after all the electronics are in place because you forgot about lighting or did not plan on changing from cable to satellite, etc.
Lastly, I would never tell someone what speaker or receiver to buy because everyone has their preferences and they should be considered together and not separately. I would suggest that you invest more in your speakers and less in you reciever\amp solution. A good set of speakers will be around a lot longer than any receiver due to obsolecence of signal processing. Your budget does not really reflect separate components and I doubt that you would appreciate what little performance gain in one receiver\amp combo over an other without good speakers to start with.
I am not bad mouthing Axiom, but I would consider something higher in their product line or another mfg first before spending that percentage of the budget on a receiver\pre-pro solution, DVD player,and a CD transport.