It depends on your needs. My HT stuff is totally separate from my 2-channel (to avoid pollution from noise or unauthorized users), so full HDMI convenience/codecs for movies is more important than the purest sound.
I have an AVR100 in a second system and I agree that the Arcam sound is hard to beat if you want it for pure 2-channel or multi-channel listening. I think that Arcam made a mistake in not supporting full HDMI. What would it really hurt to let the consumer decide? I probably would have stepped up for the AVR350 if they had included full HDMI.
Maybe it was a cost decision due to the fact that they don't turn out the volume of units that the mid-fi companies do.
So, if the system is for movies, I would go with a cheaper alternative that has hdmi 1.3.