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Seeking Suggestions for Home Theater System, $350 budget

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Howdy, I was just wondering if anyone here might have some suggestions for what I should I do to set up my home theater system? I have a Philips 1080p hdtv and a PS3 and now I figure it's time that I brought the sound system up to date. I game extensively and like to watch blu ray movies. Should I buy speakers and reciever separately or get a home theater in a box? Any specific models or brands would be greatly appreciated. My budget is about $350 and the space is a small apartment living room, would that be served better by 7.1 or 5.1?

Thanks for all your help ahead of time!

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um, none to good on speakers, but I do know of a 5.1 w/ subwoofer at bestbuy, my friend has it and it works good, nice quality... it is by logitech, and Ithink it is under 100$ or about it... Sorry I couldn't find the link! I looked, I really did! lol =D hope this helps... Try browsing Newegg, and amazon and bestbuy... sort from lowest to highest price, and google ones that sound good...

Actually you can get a Logitech z 5500 for that price. It's all in one, THX, great spacing, optical input (ps3 has), full range sound (high, mid, low), 5.1 DD - 5.1 DTS, plus when you can get your mega system you can then use them as PC speakers.
Google the specs.

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