New HT system to set up

[oliveoil]

Hello all,

I have been planning to purchase a new HT system for a while. Before I go out and buy, I was planning to do some research and this forum is very helpful. There are too many components to a good system, however, and this is confusing me further.

I live in an apartment with a small living room, and I sit close to the TV (4-5 feet at most). I'm planning to purchase the Sony D series LCD 720p or the equivalent Samsung 720p (both priced at around 1,400 USD). My proposed audio system is the Onkyo 606 with some sort of speakers (no large towers since I do not have space).

I have too many questions and I hope anyone can help.
- Is the 720p a good choice for my setup? I believe Sony have Motion-flow which is great for watching sports or PS3. I would be willing to buy a 1080p but only if I really have to as it is much more expensive. My choices are Samsung and Sony LCDs preferably.
- My friend is proposing to forget the receiver option and buy one of Samsung's complete home theater systems which should be enough and save me 700-800 dollars. I have read about the lack of support for lossless audio from such systems, multichannel analog, TrueHD, etc, but again I'm not sure if its worth it to go for a Onkyo + speaker/subwoofer setup.
- My budget is flexible upwards but keep in mind that I do not plan to pump up the volume of the audio system to the max as I live in an apartment block with neighbors. Not to forget my small setup. My real confusion lies in the audio system (cheap HT systems vs. build your own).

Thanks in advance.