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Go 5.1 (two fronts, a center channel, two rear speakers and the subwoofer, or ".1"). There are some decent speaker sets that might be in or around your price range, such as Energy Take 5.2, Paradigm Cinema, Klipsch Quintet and JBL N series.

To economize, you could buy the 5 speakers as a set and get the well-regarded (for its price) Sony SA-WM40 12" powered sub for about $160 on eBay. The savings might let you trade up to something like Definitive Technology ProCinema 80s.

As for an audio/visual receiver, any of the mainstream brands in this price range (Denon, Yamaha, Sony, Harman Kardon) should work well with the above speaker sets. They'll vary in features and sound presentation, so let your ears be the guide. I have a Yamaha HTR-5150 that I have been pleased with -- can fill up my 23x17x8 entertainment room with punch and clarity, if a bit bright and edgy at higher volumes.

Happy hunting!


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