I have $3500 saved up to buy some a new speakers for my living room/ home theater setup.
Brooks,
You've received a lot of advice. I'm going to give you a little different perspective.
In my experience, AV equipment is something you continue to upgrade as your budget increases. You replace and replace until you reach the point that you think additional $ is not worth the incremental improvement. Speakers being the most subjective component in your system, that point is most difficult for anyone else to define for you.
You are the the beginning of your upgrade journey, so you have a choice. You can spread your budget among several components, upgrading everything at once. When you've saved up $5k, you can do it again. Again at $7.5k. Again at $10k, etc.
OR
You can dedicate your budget to a single component. Go ahead and get "the one" with which you'll likely remain satisfied regardless of your budget growth. This way, you're not repeatedly spending, (wasting), money on something you're going to replace. This is the strategy I suggest.
Now, which component to pick? Everybody, and I mean everybody, will agree that speakers are the most critical part of your system. Very inexpensive electronics can sound great with great speakers. And among all the 5.1 or 7.1 or 7.2 or 7.2.4 or any other systems, everybody agrees again that the Front Left & Right speakers are the most important.
Knowing what I know now, after many upgrades resulting in speakers given away, sitting in a closet, or sold at a loss, I suggest you are in luck! Your $3500 is just enough to get a pair of Front Left/Right speakers you will most likely keep and enjoy for the rest of your life. Those speakers are Philharmonic 3s from
http://philharmonicaudio.com/
You can search this forum, and the rest of the web, to see what people say about them. I'll summarize. Until you move into the $5-10k each price range, there is probably not a better sounding speaker. And even in the $5k/each neighborhood, you can find debate about which is better.
I currently have a pair. I replaced Aperion Verus Grand Towers with them. The difference is absolutely stunning! A sub is not necessary for music, though I still use them for movies/tv. I suggest you get a pair of Phil 3s. You can upgrade your center, surrounds, subs, AVR and everything else as you get the money. No rush. In the meantime, you'll be amazed and I doubt you'll ever decide to replace them.