ht
$500 is not enough to spend on a HT system. A mid range receiver will cost around $500 alone. A semi-decent set of speakers will run around $1000 or so.
I wouldn't do HTIB, they suck and you would do better to save up an buy one piece at a time. The Yamaha rx-v661 receiver is a very good receiver that you can get for under $400 if you shop around. Next, buy good front speakers, then center channel, then surrounds, then powered sub. Then get a PS3, which is a fantastic Blu-Ray/DVD player, wifi media machine, game system etc. and you can find on ebay for under $400.
Don't buy crap or you will end up spending more in the future, when you realize that your system sucks and you want get something better. Good speakers can last you 20+ years easy and are a great investment.