500$~600$ Budget for my Home Theater.

[McLaren58]

For around that price range I would definitely go with an Onkyo 605 receiver. Its a good bang for the buck unit that will decode HD audio (even though you shouldn't need it with the PS3). I have notice a lot of retailers are out of stock with these units. The Onkyo 506 is a great unit also and has one more HDMI input and will probably be a little cheaper and newer than the 605.

For a lot of people working on a low budget, I always recommended putting your money into the front 3 speakers and then upgrading the surrounds in the future. This meant purchasing a good center speaker and a pair of floorstanding L+R. Since your limited on room I would go with the Klipsch Quintet II. This will provide you with a good 5 speaker surround setup that should fit nicely. However it does not come with a Subwoofer, but that really isn't needed living in an apartment.

Hope this helps

Whichever setup you choose remember to purchase all your cables from monoprice.com (i hope they ship to canadia). they have excellent quality and even better prices.

EDIT: BTW stay away from Bose!