Have looked at so much I have confused myself...

I have about $3500 to spend and I need new Left ,Center (can be no taller than 10 inches tall and no wider than 25 inchesdue to cabinet), and Right speakers, a receiver/controller/amp, and DVD player DVD-A (I have an HDTV so progressive scan would be nice). I have looked at so much I have confused myself and dont know what to get anymore. I have 2 zones (unit must be able to handle) and will run the 2nd zone from a niles speaker selector that will run the 8 speaker craft in wall 6.5 in speakers.

My room is large, somewhat open, and tall ceiling but I would like monitor speakers on stands. I have the room setup for 5.1 currently but is wired for 7.1.

I have looked at Rotel 1055/1065, Pioneer Elite 45tx, Integra Research 8.2, ADCOM seperates, b&k ref 30. I dont know wether to go seperates or AVR. I have listened to b&w CM (which I liked, sonus faber concertino, energy, monitor audio silver, tannoy saturn 8s, tannoy MX2s, and m&k.

I am about 85% movies and high definition television, 5% music, and 10% sports talk radio. My listening habits may change if I get something I really like the sound of for music.

I currently have a newcastle receiver, infinity RS LCR, a pioneer 100 disc, and a toshiba progressive scan DVD player.

Any help would be much appreciated. I dont know wether to spend more on speakers and amps and a little less on a controller because things change so much or spend more on speakers and go a little less on seperates/AVR.

You have alot of good options. I would spring for:

1) B&K Ref 30 pre/pro(will utilize 5.1, DVD-A and zone 2) $800-1000
2) Panasonic XP50 DVD/DVD-A (hometheaterhifi.com has this as a best buy) on ebay for $300ish
3) Paradigm Studio 20v2 L/R bookshelves $400-500 pr
4) Paradigm Studio/CC Center $300-400ish
5) You can get a decent 5 channel amp for around $600-700.

Get some nice cabling and you have a nice HT system going for you. I hope you have a Subwoofer and rear speakers currently. ;)

I wouldn't get anything more than 5.1 compliant simply because I don't feel a smaller home theater setup needs a center rear (6.1) or two center rears (7.1). The Ref30 will be all you ever need unless you plan on adding more speakers.

Good Luck.
I think with your budget for everything you want to do wont get you there and you'll be faced with the same situation. I would work on componets first then speakers. It also depends on how critical you are about sound quality! There are many out there that spend $3500 or less on complete systems and they are content with this. Sounds like your taste is for the higher end equipment so work on this in stages! Budget $1500 for amp, $1400 for preamp, and $700 for DVD/CD player thats buying everything used and your right at your $3500 - $3600 price range. Next stage could be speakers and not all at one time, maybe work on fronts as this would deal with the two channel part, then center and last rears speakers. The stage after the amp, preamp wont be so bad as you can pick up many nice speakers in the $1000-$1500 price range used, then do the same for center and rear speakers. Budget around $600 for a sub. Now that you have gotten this far you can start to upgrade wires, maybe Ps Audio Ultimate Outlets, power cords and dedicated lines. I think going this route you will be much happier and maybe get into two channel a bit more!! Happy upgrading