What to upgrade next?

You're unlikely to hear any improvement by replacing your electronics. The sonic improvements provided by changing electronics tend to be very subtle.

However, if you haven't already done so, be sure to run the receiver's Audyssey room equalization calibration: that'll make a significant improvement in sound quality.

Another major audio improvement could be noticed if you add a 10-12" subwoofer to your speaker configuration. Even the best floor-standing "full-range" speakers can't do justice to the low frequencies present in many games and action movies. Of course, if you're living in an apartment or other shared housing, your neighbors might object if you play loud or late at night. Low frequencies tend to travel easily through most construction materials, unlike the higher frequencies.

Two words: Powered subwoofer.

Two more words: Room treatment.

--Ethan

If you already have speakers you like, $300 is unlikely to buy you much if any improvement.

Room treatment is, as you might guess, very room-specific, so you might be better off waiting until you're settled someplace.

Audessy could be a bang-for-the-buck winner for you. I know of no reason why it can't help a 2.0 system.

1) Optimize speaker and listener placement. The listener should be close as he can get to the speakers without getting into their near field (ex - an 8' equilateral triangle). Everything should be a decent 4-5' to any room boundary. Slightly off-center in the room. Move things fore and aft as needed to avoid room modes.

2) Get sub-woofers. The best placement for bass below the Schroeder frequency and higher frequencies are not the same. You really need to keep low bass out of speakers with domestic sized bass drivers to avoid distortion.

3) Get better speakers.

All rooms are improved with bass traps and absorbers at the side-wall reflection points. Further, treatment can be taken with you when you move, just like speakers and other gear.

--Ethan