I'd recommend:

1. The Paradigm Reference 20 speakers or
2. Monitor Audio Silver speakers.

1. Onkyo SR674, which I do believe does up-conversion, A/V Receiver.
2. Harman Kardon 340, A/V Receiver.

1. Samsung BDP1200 DVD Player. Assuimg of course, that Blue Ray does win. ;)

The other choice is to use a Denon S-301 or equivalent but it isn't
expandable though it does produce some fantastically realistic sound
via a 2.1 setup.

Shiv, have you considered using the a speaker bar from Philips or
Yamaha? I've heard the latter and it's a worthwhile compromise.

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