Bookshelf speakers take up little room and can be easily setup, plus they offer much better audio then a HTiB which it sounds like you are trying to avoid.
Try going
here and look for the PSB Alpha B1's for about $189/pr and the Alpha C1 $169, I would get 2 pairs of the Bookshelves and a center and you would have one fantastic system. $547 total.
You can also look into this Energy setup
Center $69 and
bookshelf speakers (4 singles), $178 for a total of $247
Look at adding a smaller sub,
this is a good one, or even
this and
this.
Look for a decent receiver like
this,
this, or
this.