New Home Theater Set up

[macd1995]

I am close to closing on a Condo and am looking to set up the Living room.
It is on the small side (roughly 12 by 12) and I am looking to install components & Surround sound.

I have the PS3 Slim (MLB the show 2010 is all I play every day)
I will get the newer Sony LED (prob 46") 55" may be too big for the room no?

I am struggling with the receiver and the speakers. Given the size of the room and my wife's preference, I will go not go with tower speakers.

For the Receiver what do you suggest with the size of the room? At Best buy, they recommended Onkyo (I believe the 607) with the Definitive speaker set up ($999). I saw some interesting details about Marantz on this site, but I am unclear.

What receiver and speaker set up would you go with? Why not Bose? I could easily spend $1500 here, but I want to make sure it is not over kill

Thanks!
Dale