I was thinking some version of a Home Theater in a Box as well, but that BB associate didn't listen, or you didn't tell him all the details. That system he recommended comes with an upconvert DVD player, which you don't need. The tough part here though is, most of the HTIBs are going to have a DVD player integrated with the system. I would be looking for a 5.1 HTIB, if your budget is tighter.
If you have a little money to spend, then you can pull off a 5.1 system just fine for that room. You just won't need as much power as some of the people here, and maybe won't need 3 foot tall towers at the front of the room and dual 15 inch subs or anything along those lines.
Just cause you have a small room, doesn't mean you can't have a complete system.