An Onkyo TX-SR805 can he had for less than $700 and is an awesome receiver. It should have more power and features than you should need. The TX-SR805 is a hot running AVR, so it needs room to breath.
If heat/space is a major problem and you don't wish to install cooling fans consider the Yamah RX-V663, less powerful, but still a nice fairly priced AVR.
The third possible option is the Pioneer VSX-1018TX, still not as gutsy as the Onkyo but more powerful than the Yamaha RX-V663 and RX-V863. It runs relatively cool compared to the Onkyo as well.
Since the PS3 performs excellent scaling you will probably not need for the AVR to feature any kind of scaling. Instead of allowing the receiver to process any video you will allow the 1080p signals from the PS3 and 720p/1080i signals from the cable box pass through the receiver's HDMI inputs to the TV. The receiver will extract the audio from both the PS3 and Cable box.
Be sure to set the PS3 up to multichannel PCM over HDMI, not bitstream. The PS3 is not capable of bitstreaming Dolby TrueHD/Plus and DTS-HD/MA codecs. However the PS3 can decode them internally and output them as multichannel lossless PCM (which will sound exactly the same as it would if you had a Blu-ray player that bitstreamed those codecs to the receiver). Since the receiver will be receiving PCM you can still have post processing such as THX modes, bass management, and the audessey auto eq.
I can't recommend the TX-SR806 because it is inferior in almost every way other than it can upscale using a dated Faroudja technology that is far bested by the PS3's scaling abilities.