Quote (LAP4JSP @ Dec 20 2012 07:19pm)
total wattage =/= quality
Also, avoid home theater in a box systems. They're cheap, they're convenient, but don't sound nearly as good as a real system.
Small speakers sound like garbage. The end. You can't do an end run on physics.
I would look for a good receiver first, one that suits all your connectivity needs. I prefer Pioneer Elite, I have one an it's amazing. Onkyo and Denon also make good receivers. There are also lots of small, fringe companies like Cambridge Audio that make excellent recovers for the money. I would suggest this website for more information:
http://www.avsforum.com/f/For speakers I cannot stress enough that you need to go an demo as many speakers as you can. One thing to remember is that most speaker displays are set up in engineered rooms to make all speakers sound great. This won't necessarily be true of your room. But you have to listen to different speakers to see which ones you like. I cannot recommend the best speakers, because that's very subjective. My preference is Klipsch. I find their Reference series extremely good value for the money. Some people don't like their sound so I would listen to them before you buy.
Finally, for a sub I would look at a trio of direct from factory subs:
http://www.hsustore.com/http://www.outlawaudio.com/products/lfm1plus.htmlhttp://www.svsound.com/subwoofersThese companies have become well known for producing excellent sounding subs at a much lower price than mainstream companies. They're extremely good value, and often preform at the same levels as subs that are 2-3x their price. They've also started to expand their lines to speakers which may well be worth considering.
If you cannot afford to buy a complete 5.1 system all at once I would highly recommend buying a receiver first then buying two good speakers (towers or bookshelfs), then add a sub later on, then the surround components. I realize that people want surround sound, but I know that when I started my system, with just two bookshelf speakers, it sounded better than most peoples' HTIB systems.