Good compact system?

My oldest son just bought one of the new X-box systems which is HD capable and has digital audio 5.1 capability as well. He's has a HDTV and is wanting to buy a small sytem to handle the audio for his DVD movies and X-Box.

I know he can go with a reciver and small 5.1 speaker set-up, but I was wondering if there is some all in one pacage option that are decent.

Any recommendations?
If he doesn't have a cable box to connect, then he can plug is X-box directly into the Blue Sky Media desk 5.1 system. Which is a studio grade powered system.

This system handily out performs the totem dreamcatcher system with a competent receiver connected (no small feat) and is available at Guitar Center probably for less than $1K. Amps for the satellite speakers are built in with the subs amplifier.

If he needs switching the Creative labs DTS610 will cost $149? and allow his computer (itunes?) and his cables box and Xbox to be connected and switched, 1 small draw back...all video runs will be direct to the TV. the sound...well its Hammer Time!
Actually if you can find them Videologic digitheater is a great little 5.1 setup that easily outperforms most american brands. I had these for years before I decided to upgrade to a dedicated 2-channel set-up. Good luck.
Denons new 2.1 mini system is quite good. Also u may want to consider the Yamaha YSP 1000 or 800....its a one box soltuon that includes mutli channel speakers (processing so sound bounces off walls), amplification....and add sub. Not as complete as a true 5.1 system but saves space, decent effects, and works even better in small symmetrical rooms.
You should also check out the Acoustic Energy Aego line. I'm very happy with my 2 channel setup in the kitchen, but they do 5.1 as well.