I'd probably do 3 M3's across the front and 2 M2's for surrounds in the Axiom lineup.
As to the sub, I don't know how the Canadian dollar shapes up relative to AV123, SVS, Hsu, etc. "Budget" is pretty relative, and I am pretty sure my parents/inlaws would balk about that much sub in context. That AV123 X-Sub seems like a pretty good deal, but I haven't heard one.
For a truly budget HT, I'd look pretty seriously at the Hsu Ventriloquist system.
Make sure the receiver's user interface makes good sense to them. No matter how great the speakers are, if they can't get any sound to come out, you can't be a hero.
