I have a dedicated theater (21d x 15w x 10h) with the following setup:
TV: Mitsubishi WS55413 (connected via Component)
Receiver: Yamaha RX V-1200
Speakers: 2 Atlantic Technology 4200e (L/R Front)
1 Atlantic Technology 4200e (Center)
2 Atlantic Technology 6.3e (Ceiling)
Dish Network VIP722 DVR (connected via Component)
Sony DVPNC685V (connected via Composite)
WD TV Live (latest generation) (connected via Composite directly to TV - here's why
50% of what I watch is via Dish Network, 48% is streaming video via the WD TV Live, 2% is DVD. I don't buy/rent Blu Rays often.
I know the receiver needs to be upgraded to allow for HDMI connections.
What receiver would you buy and what would you do beyond a new receiver assuming a $3000 or so budget?