System for a gamer

I'm looking for a system to hook up to my Xbox360 - I'm going to be using this #1 for gaming, then also for watching DVD's and maybe streamed movies from my computer. I also watch OTA HD using my TV tuner (that does have optical audio out). Right now the xbox is connected via components. I'm not planning on getting an HD/Bluray player until formats are sorted and prices drop, probably years from now.

I was excited about getting a HT-S790 for ~$300 after reading about it today, but it seems the lowest price is more like $450 right now. I have a 237V LCD, and sit about 10ft away, so a medium sized room. My reference point for audio is the Klipsch promedia 4.1 and 2.1 computer speakers that I thought were good stuff, I don't have any high-end home theater experience.

Budget is $350-500, I'm more of a "value player", in that I don't mind spending $500 as long it's a greal 'deal', ie. a system that normally sells for higher. Help?

So I picked up an HT-SR800 from CC today...all I can say is HECK YEAH!!! I paid $450 for it total, which isn't a great deal compared to the $300 HT-S790's that were around, but quite frankly it's bloody well worth it and I'm amazed! Beats the crap out of anything else I've owned, so I'm well chuffed.

Couple questions though:
-Is there any difference in high vs low priced optical audio cables? The only I have is a cheapo $16 Philips one from walmart that's actually translucent...should I upgrade?
-Are LCD's affected by the magnets in the center speaker? I'm wondering if I need to move it away from the LCD TV...?
-What sources take advantage of 6.1 or 7.1 systems? My xbox 360 only does 5.1

Thanks mate! I'm really enjoying this system haha (I know I know, it's not $5k top end gear, but it still sounds great to someone who's not had a real home theater system before, let me be excited ;-))

The speakers are indeed shielded, I guess I was just being paranoid for my precious LCD!

I didn't realize that you could get >5.1 on standard DVD's...since the Xbox360 only outputs 5.1 max, I may have to get a separate DVD player. Oh well, HD-DVD vs Blu-ray anyone? *grin*

Thanks, I'll look at some speaker wire from monoprice.com, hope they're as good as everyone says!