Small room with HT hopes

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I currently have a nice big screen DLP in my tv room, which is just about the maximum size recommended for a room of its size, at 56". I'm looking to enhance my experience with a nice sound setup but I have a few questions and if my experience here has taught me anything it's that this is the place to come with questions.

first - as I said it's a small room. I want the audio less for the big bang boom of the sound and more for the sound placement and the surround feel... also so I feel like I'm getting everything I can out of my blus. I already know that 5.1 is all I need but I guess my first question is, this is worth it right? I don't want to put a lot of money into something to find that it wasn't really worth it, though I don't imagine that there wouldn't be an improvement just because of room size. so this really is an easy one .

second, far more important - I'm not looking for specific reccomendations but I'm wondering how much I could put a system together for. I'm hoping to keep it around $1000 - $1500 all told. I'm a college student, part time worker, and I live at home but my family isn't really interested in the sound part of the whole deal. I know I'm interested in the Onkyo reciever, 605 probably, just seems like the obvious way to go. I'll be hooking my ps3 to it. just looking for a bit of a range to help me start my research.

that's actually all I ahve. I was going to get specific but I think having general information first will help me out. I'm gonna need to have the equipment in hand before I worryt about things I've never done like running wires and whatnot. I just want to get the full lossless sound experience out of my home system since I'm already buying the blus and loving the visual treats.

thanks for your time guys. I know this is basic stuff to you but I need this little bit of info to get myself on the right track, make sure that my end product si something to be proud of.