I won't pretend to know as much as several of the people who will undoubtedly answer this post, but a very nice, and cost effective system is the HSU Ventriloquest 12 system paired with the stf-2 sub. The package is available for $559.00 right row direct form their website. I actually listened to this setup on Saturday while helping someone else pick out a HT system. The sound and depth you get for the size of speakers is truely amazing. The specs can be found by clicking below, and you can get to reviews of the product by following links on the HSU site, or by looking them up yourself online. The bass you will get is very accurate, and will blend well with music and home theater. There is the potential to shake your house, but probably not the neighbours unless you were really trying or live in a semi detatched.
http://www.hsustore.com/vt-12-stf-2.html
As for receivers I would suggest an Onkyo 602. You can buy this at JR.com right now for $350.00 by clicking on the following link.
http://www.jr.com/JRProductPage.process?Product=4001965 I would suggest this receiver for the following reasons:
1. In a review I read they ran this system system at the 2002 CES convention with an Onkyo receiver (either a 501 or 502 can't remember), an Onkyo budget dvd player, and they used Home Depot wire to set everything up and they won the budget product of the year.
2. I jokingly asked an HSU service rep if they would care to reccomend a receiver, a question he took seriously and answered that while he wasn't familiar with too many receivers, he knew they used Onkyo receivers there in the building
3. At the shop I was at they were using an Onkyo receiver to power this setup as well, I think it was an 802 however.
This brings your grand total to very near $910.00. That should leave plenty of cash for the DVD player, cables, speaker wire, maybe a nice bouquet of flowers for the missus for letting you get new toys, etc...
Your question about DVI and HDMI is one that I have been following very closely, and researching myself as of late. The best conclusion I can come up with is that the option is nice, but this is new technology. If you can't use the technology right away (with your TV you can't) then I'd go for a DVD player with really nice sound and a good quality picture (if your toshiba can do components I'd really suggest this way) like the Harman 22 ($199). If you need the DVI, and can't wait untill it drops in price I'd reccomend the Denon 1910 ($249.00)
Hope it helps,
Have a good one.