order of improving sound quality in system?

I also used to adhere to the philosophy that you should start with the source, which is a very logical assumption, but after trying it both ways I came to realize that the colorations introduced by average speakers will be far greater than those introduced by average electronics.

The best speakers in the world with average electronics will still sound very, very good.

Average speakers with the best electronics in the world will sound average.

Start with the speakers.

Looks like I agree with you for starting a system: pick your speakers, then match their power handling limit to the rated output of a power amp. Then get a preamp from the same company as the power amp. Now that you're broke, get a cheezy DVD player to spin CDs until you can't stand it anymore and buy $20/pair interconnects and a spool of speaker wire at Radio Shack.

For upgrading what you already have, the trick is use all your senses to figure out where the wrinkles are and then address them as they manifest themselves. Sorry there's no formula I know to achieve that.

Abaseballfan 1, I think your on the right track. My suggestion would be to (1)st consider your real world budget, (2)nd your audio room and how long it's likely to be your audio room (power outlets, equipment racks, placement, seating postion and room treatment options are all part of this consideration), (3)rd speakers, (4)th amplification, (5)th control center (pre-amplification), (6)th sources, (7)th cables. Caveats, (2) room treatment may need to be readdressed after speaker choice, (5)control center may be somewhat dependent on (6)sources, after all you'll need enough inputs and out-puts depending on the number and choices of sources, this is futher complicated if video and/or surround sound is part of the system.

Thanks for all the input everyone :)

I agree with Hack, though would add power (specifically dedicated lines) as being only slightly behind cables/wires. I came to this conclusion kicking and screaming, initially placing a much higher priority on speakers than on source (dead wrong, but some of us are slow learners). Any speaker manufacturer - Wilson springs quickly to mind - who tries to tell people otherwise is working a scam, as far as I am concerned.

Of course if your system is wildly unbalanced by one poor component, including speakers, it is not going to sound good. Balance and rationality is still of great importance in deciding on upgrades.