What do you think of this Budget Setup for Bedroom for Gaming and Watching Movies??

I think you will notice a considerable improvement when you move away from the tiny Sony toy speakers to real speakers. The TSC speakers get very good reviews for their price point and, although the Polk is not my favorite sub, for the price quoted by Newegg, it will be a very good addition to your setup.

Nice choices.
I would keep shopping on the sub, if possible. I see those go online for around a hundred bucks. Is that the top of your budget? If you could spend a little more, think about these options:
http://www.hsuresearch.com/products/stf-1.html.
Also, http://www.parts-express.com/wizards...TOKEN=91941264 (Dayton line)

Don't get me wrong, Polk makes great speakers. I just think there are much better options on subs.
Definitely post in the sub forum with your room size and budget. The experts there will have a recommendation.

I have the LCR3 set from TSC and I really like them. I would agree with the others here and look for a better sub. I have the TSC ASW-10 sub and it's much better than the polk you mention. It's also $50 more however. For the same price as the polk you can get the ASW-8 - it's smaller of course but gets great reviews. (they're both Energy Sub clones) Good luck.

Tiga