Terrible room. Contemplating headphones. Help

I need help here. I have PSB Stratus Bronze speakers, an Audio Refinement Complete amp, and have just sold my Denon 1650ar, because it just wasn't "doing it" for me. I realize the Bronze speakers might like a different amp, but I used to have Triangle Titus speakers(needed more bottom end) for which I purchased the ARC amp. I am a college senior who got the short end of the stick during room selection and have moved from a suite with a large common room to a single that is a dismal 10'x13' with nasty sound-reflecting walls. If I clap my hands or whistle I get a nice echo. So, I am thinking of either purchasing a Sony 9000es(perhaps after the replacement drops the price) and hoping the room doesn't completely ruin the sound, or selling it all off and getting a nice cdp and headphone amp. If I go the speaker rout I have about $700 to spend on a player. If I sell it all off I'll have around $1700 (my gear isn't in perfect condition). If I had to I could stretch a couple hundred more, but not far. What should I do? Any suggestions would be greatly appreciated.

PROFP022-6 should do it. I noticed audioadvisor has now jacked the price of that kit up to a rip-you-off $90. Its still $70 at silentsource and it wasn't long ago its claim to fame was only being a $50 tweak.
I would suggest 2 things. First of course is the room. You clearly need some absorbing material, and you can get it cheaper than the foam recommended above. Medium density fiber board such as owens corning 703 works great to get rid of slap echo and has a broader bandwidth than foam. You can buy some stretch fabric and wrap these panels. The room is so small I wouldn't worry too much about diffusion, due to it's effects being difficult to manage in a small room and diffusors are more expensive. Yes, they will make the room sound better, but you need ones with the right band width, design, and placement--it's just not very cost effective. The other area I would seriously consider is changing your speakers. PSB stratus series is really for larger rooms and does not accomodate nearfield listening very well. A pair of very good monitors that are designed for nearfield imaging (not as close as desktop though). One pair of speakers (although not monitors) that I have heard work very well in smaller rooms was the Totem Arro.
What about Sonex??? Not that expensive and kinda cool looking.
Sonex and a decent parametric EQ. E mail me for details I'll tell you how to measure out the room and set the thing properly
Reviving an old thread here. Does Bob's suggestion (hang headphones off speaker output on your amp) really work? How is sound quality compared to "real" headphone amp? Do you risk damaging the phones (or ears)?