Receiver upgrade under $500 - Suggestions anyone?

[SanDiegoMike1]

I'm a casual listener with an appreciation for DVD-A, and I enjoy watching movies in surround. My current system:
Onkyo TX SR607
Acoustic Research AR7 Speakers x 4
Acoustic Research AR4C center channel speaker
Acoustic Research S108PS Subwoofer
Panasonic DVD CP72
Acoustic Research 215PS book shelf speakers in zone 2
Samsung 58" Plasma hdtv

Problem: 1)the Onkyo will not send digitally sourced audio to zone 2 (ugh!!!). I can not live with this problem!
2)the Onkyo does not have a USB port for plugging in friend's ipods.

The Onkyo is only a few years old, but problems 1 and 2 seem insurmountable.

Any suggestions for a AV receiver under $500? I've noticed most have video upconversion. Is this really necessary or desirable? How do you feel about 'factory refurbished' electronics?

I'm new to this forum and not sure if I posted this in the correct forum category. Thanks for sharing your opinion with this casual listener.

Michael

[blackraven]

Go for the Onkyo TX NR626, it has every thing you are looking for.

ONKYO TX-NR626 7.2-Ch Network A/V Receiver | Accessories4less (http://www.accessories4less.com/make-a-store/item/ONKTXNR626/ONKYO-TX-NR626-7.2-Ch-Network-A/V-Receiver/1.html?gclid=CNOWxbvw2bsCFahDMgodj2oAQQ)

[TheHills44060]

raven's suggestion looks as good as any. That Onkyo has some nice features for the price.

[SanDiegoMike1]

Thank you for your responses.