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3k is a great start!
Lets start with the heart of the system the Receiver. Right now the Onkyo tx sr876 Onkyo tx sr876 is the receiver of choice as it has a great amplification section and has one of the best video processors available the Raon HQV chip for under $1000.

For speakers and a sub I highly recommend going with this 5.1 speaker system made by a company called SVSound. The SBS-01 speaker system is tough to beat and the price is virtually impossible to beat given the quality.
Add a PB12 NSD to the setup and your going to turn some heads. For a total of $1089
That leave you some money to either buy a second sub (recomended for that size room) or upgrade your display.
 

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If you dont mind a silver Onkyo 876 there is one here for a little less.

You can also look at upgrading yopur front speakers to the SVS MTS -01 towers for just over $1300 they are a steel and you would still be within your budget.
 

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They do run a little warm (I have one) but this is the case with any receiver that has the features that the Onkyo has. You would have to pay about $1400 to get into anything equivalent with another brand. Just give it room to breath by leaving the area above it clear and you wont have issues.

By the way my wife and I really want to visit Chicago one day soon (maybe in 2011) as we hear its great city to see, We have never been their.
 

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Is this model from last year's.
Yes but your not missing anything thats out in the new one other than the height channels Dolby PLIIz now has but then you need another set of speakers. And I dont believe that Onkyo has released the replacement for the 876 yet (877)
 

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OK so to me that's not deal breaker. I have check out svs one more time now I have looked specs of both the sub and the speakers and I not sure if I have the room for them because the room is only 200sqft.
SVS has a nice small sub the SB12Plus its outout is not quie as high as the NSD but for its size you cant really go wrong.
On another note my wife and I had plans to visit your fair city to watch the Hawks take on the Oilers on jan.26 but it doesn't look like that's going to work out.
Have you been up to Edmonton before?
 

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Sadly no, seen the Hawks play in almost every venue in the U.S. still haven't been able to see them play in Canada yet. THE KEY WORD YET.
If you do come up drop me a PM in my mailbox here and I'll see if we can meet up somewhere Youll have to check out West Edmonton Mall if you do get here.
also do you have any options on the speaker offerings from Ascend.
Ascend are good but I have not heard them. If you do have a chance to listen to them its a good idea. I am sure someone here has more info on them, Hopefully they will chime in soon.
Anyway got to go for now. See you around here later.
 
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