Piers:
Talk to Marc at Audioshop about a package with the Yamaha RXV-430 and a pair of Axiom M2's. You should be able to get the package pretty close to your price range.
The M2's are a great pair of bookshelves and a lot cheaper than the larger and more popular M3's. Axiom is changing the twweter in this speaker and they are blowing the old ones out. Marc has them on for $199 CDN.
The Yamaha RXV-430 is exactly the same chassis/power output as the 530, 630, 730, its just missing a few features. I believe the 430 lists for $499.
I think this setup is a pretty good starting point for quality home theater,
