Let's assume your budget is $650, I would probably start with a 2.1 system and expand from there in the future. This lets you get a better foundation and end up with a nicer system instead of trying to get everything at once.
For a receiver, I like Denon because they have pretty honest power ratings, good quality, and use Audyssey room correction which helps configure and calibrate your speakers, and more importantly, your sub. The Denon AVR-X1000 is a very good 5.1 receiver with networking and the second best version of Audyssey. You can get it manufacturer refurbished with a one year warranty for $199.99
With $450 left, you need a sub and some bookshelf speakers. Since you are in smaller room, you won't need quite as much sub as someone in a larger room would. Subwoofers need to pressurize the volume of a room, and any spaces connected to it. The Dayton SUB-1200
is one of the best budget subs out there. It has it's limitations, but it's hard to beat for $120.
With a little over $300 left, you need a pair of bookshelves. I would take a look at a few different ones:
HTD Level Three
HSU HB-1 MK2
These are some of the best options in this price range, and would give you great sound. I own the EMPs and they sound very good, but you really can't go wrong with any of them. Do a little research on these, there are numerous reviews and shootouts for them, and you can get a feel for what they might sound like. Once you have it narrowed down to a couple, look into doing an in-home trial. All of these companies let you demo the speakers for 30 days, and if you don't like them, send them back. HSU will pay return shipping, I do not believe the others do. Hearing the speakers in your own room is the only way to know for sure how they say, because room acoustics play a huge role in how speakers sound.