New Receiver Recommendation request

[Nikka488]

I'm looking to upgrade my Kenwood VR-309 5.1 system. I've had it for over 10 years and have been really happy with it (besides never being able to get DTS to work lol). Now that I've upgraded to 1080p (Samsung LN46B650) & Blu-Ray (PS3) I'd like to upgrade my sound system as well. I have to be somewhat 'smart' with my expenditure.

Here's my request: Please recommend either:

1. A receiver (preferably 7.1) and a site to check out between $300-$500.
Or
2. An All-In-One system (preferably 7.1) which can decode all of the current audio streams on Blu-Rays. Preferably under $800, but up to $1K. (This might require me waiting until i get my tax return LOL)

If I end up going with just a receiver I'm hoping my existing Kenwood speakers will work until I have enough to upgrade them.

I'd like to say thank you in advance. I'm sure many of you get these questions all of the time. I however don't have any friends or co-workers who have any knowledge in these areas.