jray,
I've seen this happen a few times on forums-
1. New member comes with budget and request to help.
2. Forum members all pitch in and in their typically helpful nature, give various options
3. Newcomer overshoots budget by a wide margin and ends up buying something not financially viable for him at the moment.

My advice to you is - Stick to your budget!
If you have a figure in mind (1L?) then do not go overboard, no matter what any of us say. I assume you've come up with that figure after due consideration of what your finances are. All of us here are passionate about musical reproduction and will always try to make you buy something which (in our opinion) will sound excellent. But if that choice exceeds what you can pay, either start piecewise or go for a less costly complete setup. Getting the perfect audio setup is like finding the perfect woman (both don't exist, the latter even more frustratingly so...).
Mridul et all have given you great suggestions but finally see whether your room really requires FS and SW or whether BS and SW will be enough. Add rears later always, setup your 2-channel first (with or without SW) and then choose receiver and CDP/DVP. Once that's done, you can see what the sound is like. The rest (CC,RS) can be added piecewise once you are satisfied with the overall sound. Also remember that any money you save can be used towards buying the music you like...which is better than spending it on expensive, gleaming speakers that have no source material to play, once in your living room.
-Jinx.