Home Theater help?

Without information that is more specific than that provided, the gear that your are talking about is nice, but would not be considered expensive comparative to what is available.

As with any purchase, determine your budget and then shop around. Audiogon and videogon.com are both good places to ask questions about various components and also a good place to find deals on used equipment.

You also need to answer such question as: Are we going to use the system to enjoy music as well as TV and movies? What type of system is sized correctly for the space that we have?

If you intend to enjoy sound as well as moving pictures, the careful consideration should be given to the DVD and CD player, amplification, loudspeakers, and even the interconnect and speaker cabling. The wrong choice in any of these areas can lessen the value of the the good choices that you make.

You might also want to make sure that in wall speakers are what you really want, they dont show up in the room and that is great, but do you want the best performance your budget can acheive, or do you want invisible speakers,
I agree that what they are suggesting is not at all on the expensive side, a bit of research will show almost instantly how costly equipment can get.

Do a lot more homework!
Find friends with HT.
If this is expensive to you, then you will feel stuck
with it once installed.
Also, in-walls are fairly permanent since they are cutting custom holes. Don't do it unless you are sure that is what you need. Some in-walls are great, most sound muddy and lost unless installed properly and in the right environment. You are usually losing some sound qualities to get the "hidden" speakers.
Denon is one of the best all around receiver manufacturers.
Pioneer tv's are really nice-however, you can get very close quality for much less $$$. Look at panasonic. Don't buy a name you've never heard of.
You didn't mention dvd player. Go with Denon for quality, ease of use with the receiver and consistency.
A line conditioner is a must to help save the gear and improve quality. Panamax or similar is great.
Final note: HDMI can be awesome if you have a digital source. The biggest drawback is cable costs. Check out someone like the cable company or bestcables to save about 75% on cables. Monster will kill your budget and isn't so great.