I am getting ready to pull the trigger on either the Denon 1609 or Sony STR-DG 920

Having sold both brands in a retail store I can tell you that the Denon quality is way superior. bells and whistles don't mean a whole lot when it comes right down to it, but the general consensus is that Denon, Yamaha, Pioneer, Marantz, and HK are all better build and as good or better in sound quality. I just purchased a Denon AVR-888 (last years model) from the Brazilian River place for $375, no shipping. It's the same as the 2308 from last year minus a couple of minor features. I think it's the best bang for the buck out there right now unless you insist on having all the HD codecs on your receiver. But your player can do that and transmit over HDMI using LPCM.

The Sony S350 doesn't decode DTS MA, only Dolby True HD I believe (unless a new firmware for it comes out which may or may not happen). It will bitstream the DTS MA, but the 888 won't be able to decode it.

IMO, there are a couple of key things of which you should be aware when making this choice. First the 920 has 4 HDMI inputs vs 2 for the 1609. This is important given the trend in AV equipment to HDMI for best quality audio and video I/O and for connectivity for your current/future sources. Second, the HDMI implementation on the 920 vs 1609 is "repeater" vs "switcher". That means that the 920 processes audio received via the HDMI connection (including lossless TrueHD/DTS-MA from a Blu-ray player); the 1609 does not have this capability (it requires a separate digital audio connection to it from every HDMI source and can't play the lossless high def formats from your Blu-ray player which has no multichannel audio outputs). Third, the 920 converts/transcodes analog video signals to digital HDMI. That means that you can connect analog composite and component video (sorry, no s-video I/O on the 920) as well as HDMI video to the 920 and have just a single HDMI cable going to the TV. The 920 also will scale analog composite and component video up to 1080p. The 1609 will do neither of these things. If these features are important to you, then look at other similarly equipped AVRs from Denon, Onkyo, Harman Kardon, etc to compare with the 920. Like I said, JMO.

Yeah, look at some screen shots of the 920 GUI OSD. Really nice and a major point for me.

I was just about to say, yep the GUI on the Sony is very nice, even when you are watching a program, when you bring up the gui, you can still see the program faintly in the background. I own one and I love it, less wires!!! no more optical and/or coaxil digital cables all sound comes from the HDMI cables I got hooked up from my PS3 and HD-DVD player and soon to purchase Sony BDP 350 (want to bitstream my hi def audio signals and use PS3 for surfing and gaming). I have an older xbox 360 no HDMI BUT with the DG920 I now go component video direct into the receiver and out HDMI to the tv and I get 1080p upscaling looks great!!! Sound quality is not to shabby and the auto calibration with the mike is a breeze. After calibration you can use the GUI go in and tweek the settings to your liking. I love my Sony and FYI the upscaler is a FAROUDJA chip so you can't go wrong.

i think you should consider the avr1909 from denon at a $600 budget

+1 As I stated earlier the build quality and SQ are much better in the Denon.