What I suggest you do is go look at the Klipsch satellite 5.1 speaker system, which I believe retails between $299 and $399. This speaker system was originally designed for PC-based HT applications, but it is can be used in virtually any HT application. All you would have to do is add a DVD player and a monitor.
Back in June this speaker system was briefly reviewed by either S&V or TAS (forgive my ginkgo biloba deprived brain for not being more specific), and the reviewer was quite ecstatic at the performance to cost ratio. He mentioned that if one were setting up a small 5.1 system in an apartment it would be difficult to justify buying one of the $1,000 - $1,400 speaker systems made by others.
Just my two cents. YMMV.