I've got what you could consider a decent, modest two channel system, and at times it sounds like I have 12 channels, 30 speakers and sound is flying everywhere.
for music, two chan all the way. hands down.
movies, thats another can of worms entirely, IMO, and surround is great. nice and clear. good separation ...and thats due to the way the DVDs are mastered w/the surround info in place to be here, or there.
the speaker suggestions given are all excellent. I'll add the Epos ELS-3 to that list. cheap and very highly regarded. never heard them myself, but have owned their bigger brothers and loved them.
they have a new ELS-8 monitor that is getting good reviews in forums. no official reviews that i'm aware of yet.
http://www.epos-acoustics.com/ advice from an old friend:
"get it right, do it nice. If you make a mistake you're going to pay for it twice"
VERY true when it comes to building a stereo. fuck trial and error. been there, done that. costs lots of money. Just do it right the first time and dont look back. that doesn't require going big bucks, just due diligence.