Time to Upgrade?

[Furious911]

Hey guys I wanted to get some info from you guys about whether or not I need to upgrade. At the moment I have a system that is probably 5 or more years old or so. Its your run-of-the-mill BestBuy Yamaha bundles with 5.1 sound. Not the cheapest but not the most expensive by far.

Now this thing has Dolby Digital, DTS, Pro logic I and II and optical audio, etc, which is what I'm using now for my PS3 Blu watching needs. I dont know or even have a clue how to tell if "TrueHD" is supported.

I just recently bought a house and went into the attic to mount the 4 surround satellites in the corners of the room and my center and base both reside near/on my entertainment unit.

The satellites are kinda heavy which makes me think they aren't really generic and this thing can put out some major sound, but I'm wondering if upgrading would make it sound better. My living room is rather small, its not tiny but its long and not deep, the way I have my setup, like I sit about 10 ft or less from the TV lol.

I don't need or want loud sound but I want good sound and I wanna hear the satellites etc. Or the sound move from front to back etc.

I have a friend who has a Yamaha receiver and 7.1 JPL speakers and it sounds amazing, like during a football game you can hear outta the back speaker someone cheering in the stands and stuff, another friend has a Bose satellite setup and his sound just plain seems to sound better. I set both of their stuff up too so I know they didn't tweak anything, they have no clue lol.

Also why do receivers have HDMI? How does the setup go? HDMI from PS3 to receiver then receiver to TV? Is it better then optical audio that I have now?

So my question is, is my setup fine for Blu in a small living room with optical audio etc, would upgrading be worth it? What would I upgrade too, I don't have much of a budget and don't need loud thumping sound, just "cleaner" sound if that makes any sense.

Thanks guys, any advice would be great.