How do you determine how much to spend on speakers

I would spend 1/2 to 2/3 on speakers. It deepnds on what speakers you like, after all. Some speakers may take a lot more power to drive them, and so you may have to buy a used high-power amp to start with.

Use the same formula that DeBeers uses (but wait, there's more than one!):

http://minuk.vox.com/library/posts/tags/debeers/

http://www.dashes.com/anil/2006/12/01/blood_diamonds

I spent $1600 on speakers (Paradigm Studio 60 v.3) , $500 on an integrated amp (Marantz PM7200) and $1000 on my SACD player (also Marantz-SA8260). Three hundred or so on cables and it worked out well for me. The amp is great for the price , but has been discontinued (as well as the SACD). They show up used here and fleabay. I don't know if you can set a "percentage" value with this question. Audition as many combos as you can with a total cost under your budget and pick the one you like best!

No more than $1000.... DCM TFE200's!

I'm with Uraniumcommitte's 1/2 to 2/3 of total component spend, as a rough rule of thumb for speakers/sub (excluding room treatments and very small rooms). Distortion figures for speakers often make them the weakest link in the chain.