Primarily posting because I need some help with speaker placement but if folks are willing to recommend components that fit my budget that is wonderful as well.
Below are pictures of the room. These were taken before I bought the house but the setup is about the same (couch placement, etc). The TV is above the fireplace (I know, I know, let's try to forget about that for the moment).
Budget: $500 - $1000
Need: Speakers, Receiver, & Subwoofer
TV is 3D
Leaning towards in-wall/in-ceiling speakers but I am open to other suggestions. I also have a 2 1/2 year old daughter running around so I am hesitate of having anything on the floor or otherwise that is within her reach.