is a center channel really necessary??

I am currently redesigning the family room and have the option of installing a 5.1 system but have always been a 2 channel kinda guy. I love films and music equally, but assuming a fixed budget, may $4K, I know I could get a killer 2 channel setup but just a mediocre HT. MOst films I like aren't effects type, but I am concerned about hearing dialog clearly.

How much does the center channel matter?? Won't a set of good monitors image well enough to handle the dialog??
The simple answer in my humble opinion is: yes.

A couple of things to consider is the room layout and seating arrangements. The other factor is how well your AV Pre "sums" the center channel sound to the R and L speakers.
My center channel sits idle most of the time. Once the placement of the Maggie 20.1s was perfected the center channel became just extra baggage to me. When sitting in the sweet spot it sounds like the center channel is on anyway due to the sharp directional focus of the Maggies. Generally speaking the movies are just fine without the CC, although sometimes, in action movies, it seems that the center channel does a better job of separating the voices from the action.

Also, on a lesser note, I hate to see that electric meter spinning so fast with three monos going all at once. OK, call me cheap!

As usual though, so many of these discussions are interesting but not necessarily poignant because everybody's systems, room layouts, etc. are different.
Like many of you, for my non-audiophile friends I am the go-to guy for all things AV. For those with no existing infrastructure in their homes I set them all up now 2.1 for home theater, spending more money on better front speakers, and a good sub. None of them have been disappointed.

If they are already wired with rear channels, we do 4.1 using the crappy, in general, speakers that are usually in the ceiling.

I nice reciever, or better yet a good 2 channel preamp, is much better to me than any 5.1 channel set up. Don't really need the center channel.
I got rid of the center channel on my hybrid home theater (4.1) 2 channel (actualy 2.1) system -- using home theater bypass on preamp to connect a pre/pro to the stereo pre-amp.

Never looked back. Didn't miss it. Now that I have separated 2-channel listening from home theater (the systems are in separate rooms), I still don't use a center channel with the home theater systm and I still don't miss it. And I love the simplifcation in terms of fewer cables, less cabinets taking up space, etc.

However, I care more about music than movies. I think a real HT buff would never want to be without a center channel as it does create better separation of dialogue from background sounds and soundtrack. For me, that small (to me) benefit is not worth the extra hassle and cost. For you it might be.

I would start with spending more money on your L/R main speakers in a hybrid system. See how well it does on movies. Then if you really feel the need for a center, get one (hopefully with a trial period) and see how much it improves things. You may be delighted with it, or you may be delighted to skip it.

In my case I bought the center first, and then, realizing I didn't need/want it, I sold it. But at a substantial loss.

Good luck.
You need a good DSP with phantom and you can get away with 4.1.

You really can't get away with anything less.
I have been back and forth with both use of and no center channel. In the end I prefer no center channel with most sources, although some sources seem to favor a center channel. Still, dialog, when I listen in 2 channel only, is clearer than with, again most, discreet 5.1 when I do comparisons. Like some above, to me, a very good 2 channel setup can negate the need for a center channel. IMHE of course.
...I am concerned about hearing dialog clearly. How much does the center channel matter?? Won't a set of good monitors image well enough to handle the dialog??

You are quite right that a good set of stereo speakers will easily image well enough to anchor dialogue where it needs to be - on the screen. However, good imaging does not have much to do with dialogue intelligibility, which you mention as one of your concerns. In light of that, you might want to consider that a dedicated center channel will often help with dialogue intelligibility, among other things.

Without a dedicated center channel, you will typically be listening to a 2 channel "mixdown" of the 5.1 soundtrack. Unlike the 5.1 soundtrack, which is the result of highly skilled rerecording engineers working hundreds of hours, the 2 channel mixdown is largely the result of a "one size fits all" software algorithm. Because of this, mixdowns are often flawed, and poor dialogue intelligibility is a common problem. Also, without a dedicated center channel, you will typically not be able to control the RELATIVE LEVELS of dialogue vs. music/fx, which is a major determinant of dialogue intelligibility.

Having said this, your limited budget would go much further if you stick to 2 channel. So, to me, both solutions involve compromises. I just wanted to mention some of the benefits of a dedicated center channel, particularly for someone concerned with dialogue intelligibility.
You absolutely need a processor that can properly mix down the L F R into just L and R. Otherwise speech will be almost unintelligible.
thanks for all the thoughtful responses so far. Just to clarify, I am debating 2.1 w/ stereo integrated vs 5.1w/ AVR (not 4.1 vs. 5.1), so Byroncunningham brings up a good point. Sounds like you DO lose alot with a two channel downmix.

And it's not just about sound quality, 5.1 will require more boxes around the room that is a multipurpose family room and as much as I like killer sound systems, there's an aesthetic issue here.

One thought if I go 5.1 is to put the surrounds in the ceiling, which takes away two boxes, but still leave 3 for the front stage which will sit on top of a built-in cabinet (maybe 24" deep)..
I agree with Shadorne that 4.1 is much preferrable to 2.1 for an enjoyable movie experience. I also agree that a poor mix down can make the dialogue hard to understand. But in my experience you don't need to spend a ton of money to get a pre/pro or receiver that will do a good job on the mixdown. My mid-range Pioneer Elite receiver does a fine job with the mix down. Not quite as good as my old Bel Canto Pre/Pro, but dialogue is always clear. Very important is to have good speakers of course.
So far we've only talked about 5.1 in a movie application. What about multichannel SACD? IMHO, ya gotta have the center to create most coherent sound wall across the front in MCH. I have my system set-up for 2CH, with HT bypass => AH tube buffer => monos, 5.1 HT using DSP, and 5.1 MCH SACD with discreet analog out (vs HDMI). Formerly did 2CH with dedicated CDP, but now moving to a one-box solution with MW modded Oppo BDP-83. For $1,500 (which includes player) everything is covered ... movies, 2CH, and Multi. So going 5.1 with SACD, there's no mix down, and there is a fair amount of information to be captured from the center channel.
Then there is the guy who ignores all of the typical rules,
of Audio...Me.

IMHO, I use the "center channel", but
not with ANY decoders, just "full range".

In addition, I employ dual speakers for Both Front & Rear,
Center channels.

So there is effectively, the same speaker cone sizes of
of just shy of two 15" cones, for Both Front and Rear.

Not only do movies, sound more "accurate, and life-like",
but the Music too, is greatly enhanced with the addition

of the Center speakers.

Being a die-hard, 2 channel man, I simply use 2 independent,
stereo set-ups, 1 in front, and the other in the rear,
and I use 2 side speakers.

I could remove the Center speakers, but then, the "room"
is no longer, "locked in sound". But then...

The mains need more juice, to make up for the -6db.(just front)
auditory effect, left removing Both Center speakers.

The sound is more "directional" without the Center speakers.

The Center, and sides, are like "whipped cream, and nuts"
on a ice cream sundae.

They seem to just "top off" the sound experience, without
any decoders, just "dual Stereo", which is the most
Natural "Surround" Sound I know of.

YES, I have "butt ugly" speakers , I admit it, but lucky for me, Music is about "Hearing" not "Seeing".

Although, to many, the mind is made up, at the Brand(Krell),
weight(140lbs) , review(John Atkinson),or any other number of ways, available,to learn of a "Product"

And "LOOKS!" mean Everything!

I care ONLY how it sounds.

Hearing IS Believing!

I Love My Music!

Forgot to mention ... similar to Bjpd57a1, MCH for SACD is run External Direct, with no signal processing.,
I had a 5.1 system and went back to 2.1 because I wanted to use my surrounds in a desktop setup. So I sold my center channel.

While I liked the 5.1, I really don't miss it at all. Voices are centered and perfectly intelligible. Sure, the cool effect of sound coming from behind me is gone, but really it was more of a novelty...the real impact of movies comes from the fronts and sub.

I think the commonly recited theory that a center channel is the most important speaker in a HT system is completely false.

I use a Marantz AVR to decode into 2.1 though, so I can't say how it would sound with a regular integrated.

IMO Yes center channel IS neccessary If you do not have a great processor in 4.1, OR if you have a 2.0 or 2.1 AND do not have a great processor..
Maybe YOU want the purity of two channel and can figure out the dialog.. but does your spouse want to? or your kids?
So you can spend the money one way or the other. The center channel IS the dialog channel. If you wanna hear what is said in a movie..and are not sitting in the sweet spot, get the center channel. (unless you have $12,000 main speakers?) The rear channels can be small unobtrusive in the wall, hung on a doorknob.. but that center is important, It should match the main in timber.
I have separate systems for music and movies in the same room. Stereo at long end, Movies on short wall. Of course the gurus will decry the extra speakers in the same room, just as having more than one CD source on, or any other of a hunded things they think is the "most important" because THEY noticed something in thier system. (To me the most important thing is doing what i find to work, and not what some jerk thinks..And this I hope goes for you as to MY opinions!)
I don't use a center channel in my HT room, mainly because a lot of the older films I enjoy sound crappy with everything coming out of the center channel only. I would rather spread the sound to both sides, even if some of it is mono. Just my opinion, of course.
I would first set up the 2 channel exactly the way you want it. The speakers are dialed in to their best spot and the electronics are off to the side and your chair is where you like to listen. Then add the extra speakers for 5.1. You can either optimize 2.0 or 5.1 but very difficult to do both equally well. That said, I like having the center for dialogue movies and SACD. Listening to full orchestras with SACD is simply amazing. I recommend the center channel.
For a 2.1 system, couldn't I choose a BlueRay player that downmixes into 2 channel rather than doing it in an AVR?? I believe the Oppo BDP-93 SE does this.
I have a 7.1 setup with 2 x Aerial 20Ts for left/right and Aeiral CC5 for center channel. For movies I definately prefer to use my center channel. It is very good, blends perfectly with my mains and makes dialogue more realistic.
Personally, I've become less and less interested in 5.1, which (esp. for music) inevitably sounds processed and unnatural to me. i still have a surround setup in my living room, but find i do almost all my movie watching/music listening on a secondary 2ch system. perhaps if i watched alot of action movie i'd crave the sensation of explosions behind me, but i've never felt i'm missing dialogue or anything essential.
ergo, i vote with the folk who recommend getting the best two channel setup you can afford now (full range speakers and 2ch integrated); conceivably you can add more gear in the future if you feel you need it, but at the very least you'll have a great base to build upon.
Stage 1 option - HT bypass integrated. Do these work??

One option I was thinking of was to wire the walls for surrounds and leave them unused for now and go with something like a Peachtree Nova (I am a Sonos user) with a pair of speakers from a big mfg (like Paradigm/B&W) so that it would be easy to find a matching center down the road if needed.

So Stage II, if needed later, would be add:
1. AVR
2. 2 in-ceiling surrounds
3. matching center

I've always wondered how well home theater bypass works as you are using the amp of the integrated with a very different amp in the AVR.

The advantage of this approach also is that I could just get a cheaper AVR as it's only going to drive the center and surrounds.

PS I actually demo'd the Peachtree Nova and a set of Paradigm STudio 10s w/out sub and was pretty impressed. Nothing mind blowing, but for a package just over $2K it was awesome.
In general I would say yes, unless you plan on sitting exactly centered between the front speakers. The center channel helps a lot with centering the dialog onto the screen if you are sitting off to the side.

Now having said that it has been my experience that the center speaker always sounds a little different from the mains and going with only two front speakers results in a more seamless sound when the sound pans across the screen. That is with inexpensive equipment - high $ stuff may be better.

In a multi-channel setup, yes it's an intregal part of it all. I direct you and any other here to go to Home Theatre's, Scott Wilkenson's Home Theatre Geeks podcasts. Two episodes ago he interviewed Dr. Floyd Toole. Any audiophile or hifi fan should know who Dr. Floyd Toole is. That podcast dealt mostly with dealing with sub woofer bass and location but Dr. Toole denoted his preference for multi-channel sound over traditional stereo sound. As a result the centre channel is very important.

That said I am a fan of stereo for music made in the stereo realm. I find most of the multi-channel algorithms turning stereo onto multi-channel sound are not quite as appealing as one could hope for. But that said THX Music cinema can sound pretty good. However having an Oppo BDP-83 and the supplied AIX Records Blu-ray sampler disc. I find professionally mixed hi rez multi-channel audio of the likes AIX Records does is VERY IMPACTFUL AND SUPERBLY CREDIBLE!
If you didn't care before, you're likely not going to be miserable without one now. Still, a center anchors the sound to the centered immage, especially for off-axis listening positions.
At very least, you'll still need latest processing for best sound. Video scaling and switching is also a big plus, room EQ's in the latest pre's are stellar improvements, sonically, etc.
If it were me, I'd be at least adding the above, plus subwoofer. Otherwise, I'd keep a two channel setup like before, and put small quality satalites around the room, and hide a woofer somewhere - and add all the above. Otherwise, inwalls all around, and a quality center speaker for the center, plus all of the above - including 2 channel setup.
To simplify, however, yeah, option one.
IMO the Center channel speaker may be unavoidable in situations where your sitting area is wide or when the front left and right speakers do not have very wide horizontal dispersion.
For music no I prefer 2.1. For movies you need 5.1
three up front and two in the rear with a sub. The question I ask is do you need a center in the rear ala 6.1 and I say no
If you are trying to recreate the Motion Picture Theatrical experience in your home, you need a center channel speaker. They have them in the movie theaters. Everything else is a facsimile of the theater experience. Yes some will say that they don't use a center and it works fine. It does but will only hold a stable center image in a very small seating area. There is also the spl level which three discreet channel will put out verses two. Much research went into why three channels across the front were necessary in Motion Picture Exhibition. Logically that should extend to the home.