This is what I would do- $200 for a pair of speakers, $200-$300 for an AVR (refurbed would get you the most bang) and $4-$500 for a sub.
You're not going to be able to get a "enough" bookshelf speaker in that budget to be satisfied with music (especially) and movies.
There are a number of nice sounding speakers in that $200 range. My personal favorite (since I own 5) are the NHT SuperZero II at $100 each. They do require a sub though.
I'll let others recommend their favorites as I have not heard many others.
My opinion of course.
Klipsch RF-62II, RC-500, RS-400, SVS PC12+,
Def Tech SC8000
Harman Kardon AVR 1600
PS3, Apple TV, Sharp 70" Qattron