| I have my rear speakers mounted in the ceiling, to the left and right of the couch, just past each couch arm. I am sure that a audiophile would say that this is not right, but it does sound good. They also sell in-wall speakers you could get to place in the wall behind your couch.
As far as brands, I like Paradigm for speakers and Onkyo for the receiver.
Going back to the HTIB, or all-in-one, brands do sell more expensive kits that will do exactly what you want and will have almost all the bells and whistels you could ask for. Less then $1,000 easy.
The features on the higher price amps get really expensive per feature fast. I would be careful that you dont buy more then you will ever need.
For comparison sake, I bought a samsung floor model HTIB a year or so ago for $99 bucks. It has five speakers, a sub, 5 disk cd/dvd changer, and two optical inputs. All this for less then $100. I picked up a $100 Yamaha sub to replace the included non-powered one that came with the kit though. Watching DVD's and playing my PS3 sounds pretty darn good. My living room setup has over two grand in speakers. They do sound better, but not $1,800 dollars better. I have since replaced the cheapy Samsung with an hdmi switching amp which through onkyo.com was less then $200. So I have still spent less then $400 for a system that sounds very nice.
But I am not an audiophile. And I am glad for this! | 
