If your gonna run a reciever then get something very easy to run, Klipsh perhaps?
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I use VMPS speakers, and VMPS passive subs. Easy to drive, great bass...and have the ability to play loudly, without distortion.
Receiver is an Onkyo 805, and two Onkyo M-504's to drive the 4 subwoofers.
Note: I just upgraded to seven channels around two months ago...it is much better than 5 channels in my fairly large room.
Give Totem speakers some serious consideration at this price point. I second the recommendation above that getting better individual speakers and staying with 5.1 at this price point is advisable. At most, consider going to 6.1 (1 surround back speaker)so that you can enjoy THX Ultra2 and DTS 6.1 Matrix-ES post-processing on traditional DVDs (and the newer formats as well of course)...
5.1 allllllllllllllll the way. Unless your room is a rectangle and your seating is in the middle facing one of the skinny walls. Even then most movies, even new ones are 5.1. not only that,in 7.1 movies the surround back speakers dont have a dedicated audio track for them as a 5.1 system/movie would give. the fact that the correct setting on your reciever for a 7.1 movie is dolby pro logic2 movie, should tell you all you need to know! If you want a more diffuse sound field in the back use a dipole/bipole speaker(preferably switchable so you can experiment).Dont waste your time on 7.1, doesnt sound as good at all.