If you are truly just interested in better sound to complement your Video setup, then for $500 to $600 I would recommend Home Theater in a Box (also known as HTiaB). The kicker for most of the HTiaB systems is that they usually incorporate a DVD player (which you already have), and often a subwoofer (which you *also* have). Furthermore, if you decide down the road that you want to upgrade a component, some HTiaBs don't play well with other components. Now if you look at separates, you start to bump up in price a bit, but also in functionality. There are a number of affordable 5.1 AV receivers from reputable manufacturers around that are available in silver for under $200 (Denon, Yamaha, Onkyo, etc.). At tyhis level you typically get 5.1 Dolby (but not DTS), 80 wpc or more, video switching inputs and outputs (but not upconverting), and often an A?B feature for a second zone. The first inexpensive, decent small speakers I can think of are the Athena Micra 6 and Def Tec Pro-Cinema 60 systems, but they both run about $500 or $600; I'm sure there are other systems out there, and other voices on the list will chime in soon.
One word of advice: cost doesn't always equal quality (as evidenced by Bose and their "lifestyle products"), but frequently you'll find that features increase with cost as far as electronic components are concerned. If you don't want 6.1 or 7.1 or component upsampling don't get...besides, it'll all be cheaper next year than we paid this year.
Bryan...but speakers are more important than the receiver, IMHO...