I always use this site for a guide. Although the list price is £200 for the best two on the link below you can prob pick them up cheaper. Go to a shop and haggle, most sales of AV stuff will be down so they will be dying for sales.
ideally after a 5.1 surround system so dvd player and the five speakers and sub. oh and only ickle sattelite speakers as the room is fairly small and with 2 rugrats they need to be wall mounted!
have got a pair of old mission 731s and target stands in the loft for when they get a bit older
Richer sounds as already said, but I'd be tempted to look 2nd hand on that budget for certain. AV gear doesn't hold it's value well so you could get a total bargain plus bang for buck you're quids in!
i got my yamaha natural sounds rx 393rds in black plus active sub(phillips) and speakers (jvc satts) and eltax center for just over 100 quid.so damn powerful i cant turn it up past 2 on the vloume cos it makes me ears bleed.....all from ebay.i used to have my own attic conversion flat with a fab system setup.haarmen kaarden amp,cannon dome side front and warfedales ,mission center and free standing rears plus 2 (yup 2) kin great big active kef subs.dts on jurrasik park was almost painful but it was truly a ear breaker.its a good job no one lived underneath it was a shop that only opened 3 days a week.if you do get an amp first make sure it does dts cos this is the best sound.....then dolby pro log2 6 channel surround..
Oh and actually... just an idea but do you have anything at the moment? You could do it bit by bit when funds allow, get a half decent amp and 2 speakers 2nd hand now, then add other speakers as you go...