Now, the conclusions from my own preliminary research say that I should just get a HTIB and forget about the rest. If i were to do this, the Onkyo HT-S907 seems to be the appropriate choice (ignoring the fact it has a DVD player). I won't bore you with the details, but this is just to give you an idea.
I'm not much of a HTiB kind of guy. When I was shopping for speakers for my apartment and didn't care much for HTiB systems. They either sounded "imprecice/foggy" [I don't know the right term to describe my impression]. The also didn't have a good response over a wide variety of frequencies.
1. I really do not care about output power/ decibel level. In fact, high levels of this is rather undesirable given my living conditions. Intuition suggests that if I compromise on this, I should be able to get good quality speakers that cost less than ones intended to deliver a lot of power. Is this correct?
Your living space is small enough that I wouldn't think that output level should be much of a factor in your decision. Even hard to push speakers with a budget [decent 400$ receiver] will probably be loud enough for an apartment.
2. There don't really seem to be speakers with great sound quality (frequency response, distortion) at relatively low output level. Am I wrong? After all, how loud can I make it in a 16'x11' apartment room?
You should be able to find plenty of speakers that are "budget" speakers that have decent quality. I would think that a good set of budget speakers may actually sound better if it was quiet.
Of course my ears will not reflect your tastes .... Also you get what you pay for ....
3. If I'm wrong on the above, can someone give counter examples?
I would suggest that you do some listening tests. I would look around for speakers that are getting decent reviews and see if you can listen to them to see what you like.
4. If I were to purchase speakers separately (and not as a 5.1 or whatever), then is there any reason why front L/R speakers are different from surrounds?
If you listen to pure stereo modes [2 channel music] then it's not necessarily a bad idea to make sure that the entire set of front speakers are high quality. For music many people that I know only use their fronts and the surrounds never get a workout.
This is good enough reason by itself to at least consider higher quality fronts than surrounds.
5. What is the minimum speaker configuration I need to start off and be able to add to later on? 2.1? 2.0? 3.1? (2.1 + center).
There are too many variables to answer for you. If it were me the absolute minimum that I'd start at would be a 2.1 system esp. if I were on a budget. Inexpensive speakers don't sound good to me without bass management. YMMV.
However if you're a music primary sort of guy I'd check out the bookshelf speaker shootout review that Audioholics had recently. This is esp. true if you want to start out with a 2.0 system that sounds OK until you can buy more components.
6. Big sound on movies are not too important to me. I do like my music to reproduce accurately though.
I guess a lot depends on the budget you have for speakers. If you're a 90%
music guy then I'd consider getting the best 2.1 or 2.0 system that you could afford and then add the rest of the pieces later.
The only problem with my suggestion [for me ... maybe not you] is that I like to get speakers that are as closely timbre matched as possible. When you buy your music speakers keep that in mind. I like to stay with the same manufacturer and [if possible] model of speakers so that sound effects that move between speakers don't sound jarring as the move from one speaker to the next.
BTW: Take my opinions with a grain of salt ... I'm a newb. However I do have a 5.1 system in my apartment so I do have some experience there.
