I am remodelling a client's bathroom. This morning I stopped by to discuss some design issues. She had her stereo on, fairly loud, and it sounded ok. It was a Htib. I asked her about it and she said it was perfect. She could hook it up herself when needed, and did get surround sound on the 1 movie a week she watches. There are 5 little bitty speakers with it. Not sure on the brand. I don't think there is a sub. She paid less than $400 dollars for it some years ago, just a receiver and some speakers. Does that sound like you? I told her she could get two decent front speakers and really make it sound better, but she wasn't interested.
I think the fact that you are on Audioholics shows that you want more than that. For $700 clams you can get a system. Or, I would spend as much as you can on your speakers initially. It is an investment that can last years.
Technically, you can watch movies, and listen to music on just two front speakers-spend most of your dough there. After that, a center, sub and rear speakers will be icing on the cake. Then buy a used receiver on ebay or audiogon. BAM! A system that rocks, and if you feel like you need more features in the future, spend the cash for a feature laden receiver.