General advice (Score 1)

1. Buy quality used equipment. Skip low-end Sony, JVC, Pioneer, etc. (although some of those also make high-end stuff, too). Last year, I bought a 3-year-old Lexicon DC-1 for $1800 that has long been considered "the standard" for digital audio processor/controllers. They still go for $1600 to $1700 on EBay.
2. Buy quality speakers. People have already mentioned PSB (My 3-year old set of 5 PSB alphas are for sale if anyone's interested) and Take 5. These are quality products that start around $1000 for a set.
3. Buy quality power (corollary to #1). Higher wattage generally means lower distortion, cleaner sound. IMO, buying high-wattage on a low-end receiver is the equivalent of throwing away your money.
4. Avoid optical connections. Generally considered the lowest quality digital connection for home theater. Coax is the preferred connection.

5. It would also help to get educated on home theater terminology, equipment, standards, etc. Even if you don't become a fanatic, it will help you make good choices. Be warned, however, that it can also lead you to neverending desires for every upgrade, tweak, and gadget that comes with the hobby.