Ask Engadget HD: Best home theater setup for gaming?

"I'm finally ready to build the home theater I've always wanted, and while I'll definitely be watching TV and playing Blu-ray discs as well, it's going to be all about gaming. I've already got a PS3 and Xbox 360 hooked up to an old 20-inch LCD, but I need a real HDTV and surround setup now. I know some games support 7.1, is it worth the extra setup? Also, what HDTV in the $1,000 - $2,000 price range is best for games?"
While 7.1 may not be the immediate move for everyone, we're sure some Killzone 2 players may appreciate the extra speakers. Let Phil know what setup you're running, and if you want to throw in a Xbox Live Gamertag or PSN ID as well we certainly won't be mad at you. [Note: This isn't about which system is the best, we've been there and while we might revisit the question later, fanboys, this is about the surrounding equipment so try and stay on topic, k?
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Display: Samsung 47" LCD
Arcam AVR600 running 5.1ch speaker system, with front L/R bi-amped
Fronts: B&W 803S
Center: B&W HTM3S
Surrounds: B&W 804S
10 Gauge speaker cable
Xbox 360
PS3
Acoustically treated room
The weak link is my display. I also need a sub still (routing LFE to front L / R for now)
I suggest a 40" Samsung TV, They are perfect size for 1080p movie viewing and gaming. I have both a 32" samsung and a 47" Toshiba and it seems in-between is more of a sweet spot. As far as audio goes, I have an onkyo receiver with bose 5.1 speakers. I don't believe 7.1 is that much greater than 5.1, and would only add more speakers connected to front/rear if needed.
For a single-person pc-oriented setup, I recommend the Logitech Z-5500 speakers. They pack quite a punch for 5.1 and are very cheap. I've found they feel like theater speakers for a single person.
Wow this is a really nice thread. Lots of great suggestions and not much flaming nice. the one bit of advice that many have said here that will benefit you is do your research. I have a very nice system right now that I am content with but I had to learn many hard lessons along the way. Lessons that dealt with buy a lot of junk electronics, speakers, and accessories without doing my homework. Along the way though I educated myself and am now happy. With 2K now here is what I would suggest to you.
Pretty much all HTIB are junk but not this higher end Onkyo set up. I have a couple of friends that have this system and it sounds very nice. It offers a better set up than most any people you will meet will have...
http://www.amazon.com/Onkyo-HT-S9100THX-Channel-Receiver-Speaker/dp/B001AMUFSE/ref=sr_1_1?ie=UTF8&s=electronics&qid=1255144014&sr=1-1
There are a few projectors now that are 1080p for under 1K. Might as well go 1080p to slightly future proof your setup. Here is one that looks nice. I heard there is an Optima one too for 1K.
http://www.amazon.com/Vivitek-Lumen-1080p-Theater-Projector/dp/B002I6319Q/ref=sr_1_1?ie=UTF8&s=electronics&qid=1255144248&sr=1-1
Now for Movies and gaming get a PS3. I have the both the 360 and Ps3 but Ps3 you get the bluray too. Better for your needs. The Slim can be had for 300.
Any cables go to monoprice. You will thank me later.
In the end you will only go a couple hundred over budget. Not bad considering you will be making few compromises. If you are wondering what to use for your projector screen. Improvise at first. Go the poor mans route. Go to Home Depot and get a 100 diagonal piece of particle board cut for you. Then go to Wal Mart or Michaels and buy some white fabric to cover the board. Use staple gun to secure fabric on board. Hang your poor mans screen wherever you want. Then shop around and save you money. Buy a nicer screen later. Hope this helps man...
Sony KDL-52XBR6. (Part of me would rather have the XBR9 but my set is over a year old and it still rocks)
Denon AVR-3808CI (Awesome receiver. Can't be happier. Except if it had dual HDMI-out.)
NHT 2.5i mains. (Rocking speakers. Got them cheap and they'll last forever.)
NHT SuperOne x3 (Center and surrounds. Used to have 5 of them and will do 7.1 eventually)
Velodyne CHT-8 (Cheap sub that came with my original package. Will replace soon.)
PS3 (MGS4 80gb)
XBox 360 Elite
Mac Mini
Panamax M5300-PM power conditioner
I'm very happy with my setup. Someday, when I have more room, I'll bring out the 2 SuperOnes that used to be fronts and do 7.1.
For your case i recommend panny plasma, for that budget get a S1 series, that HDTV can be beat for the price.
The best you can do is get upgradable parts, in my particular case, i have a panny P42X1 and is great TV for the price, but the S1 cost just a little more in the USA, here it cost almost twice.
My speaker system is a logitech Z-5500 but i upgrade the front speakers with a Cadence 3 channels sound bar, you can get it for about $120 on eBay and the difference from the logitech speakers is unbelievable.