Well I am far from any sort of video or audiophile, just try to get things that work well for my situation. In this case, I needed something cool for upstairs which is primarily for some video gaming action and watching movies, mostly for the kids (and me, or course). All while keeping it kid-friendly (i.e. my 8 year old needs to work the equip, keeping the little ones out of jacking with every button and light).
The upstairs bonus room was pre-wired for 5.1 and had a nice cut-out (10 feet) along the main wall. I had just a table to hold the TV and xbox with zero surround setup. Room was painted and I ended up installing a shelving system (some shelves to hold A/V components), a bunch of pull out baskets (for dinosaurs, hot wheels, and star wars figures) moved the TV to the wall, and got a new sectional.
I got the Onkyno HT-S4500 7.1 AVR, new xbox (serves as 7MC extender), Panny DMP-BDT210 BR player. I also got a LED backlighting kit, a power strip with a master control outlet, speaker mounts, and some wire hides (10 feet of small stuff for speaker wires, some larger 1" hides for HDMI, power, etc.). Kept my old but still kicking 42" plasma and the kid favorite Wii.
I have 3 tuners hooked up to a Leaf antenna mounted in my attic that feed my HTPC downstairs to deliver content to the TV upstairs via the Xbox360.
Since I had the 5.1 prewire (with high wall locations for both the front and rear speakers) I figured I would take the chance to setup a Dolby IIz speaker configuration (8 channel with front left and right height speakers). I installed the rear and front height channels the same way I did downstairs, using the wall plate receptacle to mount the bracket to. I then hooked up the LED backlight kit, installed the cable hides behind my shelving unit and hooked it all up. I used the power strip with a master controller which served a few purposes - I used the TV as the master controller, so nothing else has any power in standby mode, so the LED backlight is only on when the TV is on and also prevents the little ones from turning anything on (since they can't reach the TV power switch).
I'm really happy with how it came out. I still need to do my speaker and TV color calibration, but man, video games sound awesome as well as the BluRays. Those front height speaker do produce a wall of sound. This should work for now until I pull the trigger on either a bigger display or projector. Anyways, just wanted to share, here's the link to some more pics