A 'First' System for my Son

Tobias and Timrhu already pointed to the two options I was going to suggest. Each has its appeal, and you probably know which your son would like best. The new small NAD integrated (C 316BEE) has an iPod input on the front -- so does the Cambridge 350A and the new Music Hall a15.2. And there are lots of great-looking vintage receivers around. For speakers, the suggestions above are great. I have Cambridge S30s in my office. They're really nice, especially for the price ($219 new, around $125 when they come up used).

Go to Goodwill and get a receiver (Sony, Denon, I've seen Rotel there), a pair of bookshelf speakers, a Y cable to connect his iPod and you are good to go. He can use his DVD or game player for CDs.
I posted a want ad to my audio group for a cheap *turntable and was given a nice Pioneer in the box! by Vir....n.( He posts here, not sure if he wants everybody tapping into his generous nerve.) My son got a pair of JBLs for helping a friend.
I get more calls/texts (he never writes, he never calls!) from my son as he hunts the used record stores, than for fatherly advise- how to pay bills, keep the cold winds at bay, what color beer to buy, how to fight the girls off, which Lps play longest in order to sit next to the girl for a longer time before you have to get up to change the record, or vice...
It's a great way to stay in touch with a kid in college. and I love "visiting" him now that I know all the good used record stores in his college town.
But, although good advise has been shared above, I would not put too much expense into a system during this transitional and exploratory period. You can get some very good equipment for a few bucks and not worry too much if some beer, or ??? is spilled into the component.
*Make sure the receiver has a phono stage.

Here's a thought: Get a pair of Cakewalk (by Roland) powered monitors. They have RCA inputs, plus both coax and optical digital inputs for their built-in DAC. They also have a built-in headphone amp and headphone outputs. Lastly, they have tone controls so he can tone down the top end when listening to crappy compressed recordings.

These things are like a Swiss Army Knife of audio. They are a complete system (pre-amp, amp, dac and speakers) minus source devices.. You just need to attach the source components via either RCA analog connection and/or coax/toslink digital.

I think they are about $179 street price. I'm listening to mine right now. Oh, and I use them connected to my outdoor movie projector when we watch big screen movies in our back yard in the summer.

They are not full range as they are very small, but they have good resolution and good dynamics. If he's a headbanger, they are likely not going to have enough bass unless he uses the bass boost or bass tone control knob.

I would recommend a couple of different directions:
1- New Peachtree iDecco and Era4 speakers. Substitute a used Decco for less $$$, use a cable for the iPod.

2- Used vintage receiver and speakers. I would recommend a used Sansui 5000A or X and a pair of Klipsch KG-4s. That combo will rock the house down. You will need an external DAC for the iPod - the Musical Fidelity v-DAC or one of the HRT units are very inexpensive and sound great.

The advantage of the receiver route is that your son can also listen to FM (free music, what a concept!) and LPs if he is ever so inclined. That's how I started off my kids and they listen to more music mor ethan they watch TV by far.

Figure out how much you're willing spend and schedule a time to take him shopping to listen to different equipment with a not to exceed budget. Get him what he wants. The most important thing is that he have some investment in the system or it won't mean anything to him. Don't do the shopping for him, just provide advice.