I'm totally ignorant in this department and am looking to make my first foray into a home theater system. I currently own a Panasonic TH-42PX60U and would primarily be using the home theater system with my 360. I don't need anything too high-end and want to spend under $300 if possible. Any suggestions?

i'd check the HTIB (home theater in a box) section of the forum, you can get some pretty decent setups in the 300-400 range.

personally i'd look into onkyo.

http://www.avsforum.com/avs-vb/forumdisplay.php?f=109

First suggestion: Increase your budget. (sorry)

Second suggestion: Don't get a HTIB. Get a decent receiver, some decent speakers, and a decent sub. This kind of goes with #1, because you can't do this for $300.

Now, to completely disregard your budget, here are some guidelines you could use to direct your shopping/research if you did decide to do this:

For a receiver, if you're only shopping for 360 purposes, your constraints are not too great. You just want DD 5.1. However, if you have an HDTV and watch HD movies, or plan to do so, or might get a PS3 in the future, I'd recommend future-proofing your purchase a little by getting a receiver with HDMI so as to be able to take advantage of high-def sound. A good, (relatively) cheap receiver like this that you could look at is the Onkyo 604.
For speakers, ideally you want something that has a frequency response down to at least 80Hz so that you can have a decent crossover to a sub without any localizable bass. If you want really small ones that still do a decent job, you could look at Orb Audio, for example. If you don't mind something a little bigger, you've got a lot more options and can find ones that go down to about 60Hz pretty easily. A quick look at the Speakers Forum will generate a pretty big list of manufacturers you can look at, just beware that like consoles, there tend to be lots of fanboy-type posts about speakers.
For a sub, you ideally want something that will go down to 20Hz at least. You generally buy them based on the size of the room you're listening in, and finding a good one isn't as confusing as speakers. A good one to look at for not spending much money (relatively) and getting good performance might be Hsu.
If you do really want to stick to $300 you could try looking in the HTIB Forum and see what people there are doing/think about options in that price range.

Happy shopping.

I fully agree.

You spend $ on a television. $ on games. Then you want to skimp on the audio section! Argg!

$300 will only buy you a very crappy HTIB.

I would see if you can find a Spherex Xbox 5.1 system for less than $300. The system uses Mirage components and sounds excellent in smaller rooms. There are many reviews on the net regarding this system. In my opinion you have to spend around $1500 to get better performance.

I agree with Virtual-Human.

I was in the same position not too long ago - low budget and needed a surround system for X-Box/Music/Movies.

Rather than dropping $300 on a HTIB (home theater in a box) system I searched through the forums for some alternatives. Many suggested buying a decent receiver and some nice main speakers, then expanding (sub, center, surrounds) when you have more money.

I took the advice and could not be any happier. I ended up with an Onkyo TX-SR304 for <$100 from the Onkyo refurb store and a pair of Axiom M22s for $250 shipped from the 'For Sale" forum. My father lent me an subwoofer until I get the funds to buy either an X-Sub, Bic, or eD.

My advice would be to do your research (check out HTIB forums for an 'alternatives' thread - that's where I started). I think you will find that although you may have to start with a stereo setup, the final product will be MUCH better than what you would get with a HTIB.

you could probably have AAA audio for $300 if you considered premium headphones and a "dolby headphones" processor.

How big is the room that this system is going to be in?

for $300 buy a z-5500 and be done with it, It will be better than almost anything at that price. But don't be cheap save up and get something good I don't know why you'd skimp on the audio it's A very important part of the whole experience.

I recently purchased the Yamaha RX-V661 HDMI AVR and its been great for me. Even using the old speakers that came with my old HTIB, I get great sound. I live in an apartment, so I don't really need the biggest speakers and I don't currently have a sub hooked up.

I bought my AVR though mainly for HD-DVD and Blu-Ray movies so I could enjoy the lossless soundtracks through HDMI, but it sounds great too outputting DD from my XBOX 360! You can find it pretty cheap too for around $400 online which makes it a great value. The Onkyo 605 is another good value for an HDMI 1.3 AVR.

thanks for all of the advice. as far as the cringe-worthiness of an HTIB, well, it's a step up from my tv speakers. not really an audiophile, just looking for something with a little oomph. the room I'm in is about 20' by 20', BTW. I'll check out some of your suggestions and see how it goes. thanks again everyone.

Almost anything you get will be better than the built in TV speakers. Listen around and let your ears make a deal with your wallet.

For games, you may want to slant things towards a sub for that extra boom (unless you're sharing walls with a neighbor). The Logitech 5500s fit your initial budget, but don't expect them to fill your room with powerful sound.

I have half a mind not to post this, but anyway: found the philips hts-6500 refurbished for $135. My question is not so much is this a quality system, but what is involved in a refurbish of this sort?