im searching for a budget 2 channel setup

The Apple Airport Express runs on wifi, so you should be able to connect to it, even under a couch. You can then stream from your Mac, iTouch, iPad or iPhone through it, to the amplifier. I have all my music in Apple Lossless, and it sounds every bit as good as CD.
http://www.apple.com/airportexpress/features/airtunes.html

The Peachtree Nova would make a good amp, with a built-in quality DAC, and tube pre-amp stage to warm up the digital content. Make sure there is plenty of ventilation with any amp under a couch. That kind of scares me.

As for speakers, I would look at the Anthony Gallo Reference Stradas. Great write-up in 6moons, and they are designed to work well on, or very near a wall. Paradigm Signature S1 v3, or Mirage OMD-5s would also be a good bet. I would mate with a sub of course. There are some that fit under a couch. Soundmatters makes one, Sunfire does and I’m sure others do as well.

Good luck!
Mot

One more thought. If you have a coffee table by the couch, you could run a small iPod dock amplifier. In my office, I use a ROTH MC4 with Mirage OMD-5s and a Mirage Prestige S8 sub. It's small, nice looking, and with the tube pre/solid amp...it sounds amazing.

Or maybe some Active speakers like ADM 9T. I'm just not excited about an amp under a couch...that spells trouble. :-)
Mot

I second the idea of using an Apple Airport express to stream music from your computer, if that is an option. If you use iTunes, she can use her iPod or iPhone as a remote to control the music selection. This is the best solution because you can access your entire music collection, in lossless format, and keep the iPod in your pocket to act as a WiFi remote (no IR problem).

If this is really just so your wife can play music straight from the iPod/Phone, then you should pick up the Wadia iTransport, which I believe is still the only way of bypassing the iPod's analog section. There are several for sale her on A'gon for as low as $200.

Next, get a small outboard DAC to hook up to the transport (or Airport Express if you go that route). I've seen CA DACmagics on A'gon for around $300, and PS Link III's for around $500. If you get the Wadia iTransport, it would look (and likely sound) great on top of a Centrance Dac Mini -- but the one without the headphone amp won't be out until 2Q2011 (http://centrance.com/products/dacmini/)

Another possible neat idea is to get a DAC that can be used as a digital-source preamp. Some people are saying the $299 Emotiva XDA-1 will be one of the bargains of the century (http://emotiva.com/xda1.shtm). Other people hate everything about Emotiva. It looks like a pretty enticing deal, though. You can't beat the price, the build quality and design looks good, and it comes with a 30-day trial period to see if you like it in your home. Also, it's got one of the nicest remotes I've seen, which your wife might like.

I don't even know where to start with amps and speakers. I've got a pair of Linn Katan bookshelf speakers that I reallly like a lot, and you can find good deals on those, as well (the Majik 109's are the replacement model). However, the Katans are rear ported, so you need some room behind them (although I've heard Linn makes a special foam plug for the ports that can convert the speaker to a sealed design, although I've never heard it. You can always add a sub later to any speakers to pump up the bass if you like.

If you are really going to put the amp under the couch and there isn't much air circulation, you should give serious consideration to Class-D amps or similar switching amp technologies, which run much cooler. If you were to get Linn speakers, you might consider something like the used Linn C5100 Chakra amp that's for sale here on A'gon for $1495 (with Linn's proprietary switching technology). That's a 5-channel amp, but then you could buy Aktiv cards and run your 2-channel system in full bi-amped Aktiv mode, which should sound amazing. The amp has a nice small profile and runs cool. (But I still think you are asking for trouble from the dust.)

You could put that whole system together for well under $4k

as i can kindda see the current system there which everyone hates and the remote control works no probs what so ever a IR
denon 3805 my old recever, , pinnacle BD500 towers , belkin ipod dock
and those speakers are front ported iYikes!

yes i am considering tubes tried the idecco it hums and does not work properly with iphone 4, trying out primaluna prolouge 1