How would you start with 5K?

Thanks "Kthomas":

That was what I was referring too (the Denon AVR-5800). And I am sorry for totally misinforming the guy. There is in fact a Denon AVR-3801 available. This is a new model, and more than likely, it is likely to retail anywhere from $1,500.00 to $2,000.00, putting him WELL within reach of his goals. The Denon AVR-3801 is a very nice receiver by the way (I have downloaded the brochure two days ago). Again, my apologies.

--Charles--

Charles - I think the 3801 is not intended to be that expensive - I had heard more around a grand. The 4800 retails for $2000, so I doubt they'll bring out another model at the same price point. In any case, Denon's whole lineup is really nice, IMO - pick your price point and buy the Denon closest to it and you'll probably be pretty satisfied. And I completely agree with the point you were making about the 5800 - if you dive into this by buying the 5800 you're probably making a big mistake if you're planning to upgrade it within a year or two - that's a seriously nice piece of gear and you should get years of good service out of it. If you're constrained by budget (and who isn't) and you're going the receiver route until funds build back up, buy a lower-end one so you don't take such a huge hit. As always, having a longer term strategy to guide your buying decisions will make it cheaper in the long run.

I agree with the comments before me, with one twist. In HT the most important speaker is the center channel. I would buy a B&W that matched the sound of your 804's. Ideally, it should be another 804 or better. I can't stress enough the importance of the center speaker for HT. Almost all the dialogue and sound comes from it. For music, don't use it at all. It's difficult for 3 speakers to provide a clear, consistent sound. Stereo works best.

Second purchase, Sony S9000ES. It greatly improved the sound of my CDs and DVDs. I had a Sony 300 DVD player and a $500 Sony CD player. The S9000ES also has a SACD option for music and has progressive scan video.

Third, a TV to take advantage of the progressive scan.

To All: Good advice. Thank you. We bought the N804's and HTM2 (yes a step down from plan) new (people want almost full price for used anyway) for a little under $4K. Beautiful speakers - hooked up to an older Denon that sounds pretty good. Now we're shopping for an amp ... but after doing my taxes I may put that on hold.