You say this is for an entertainment center. So I presume you will be using it some for movies. In that case deep bass response in your speakers would be impressive. Later you might consider upgrading to a 5.1 surround sytem. At that time you would buy an AVR receiver and three more speakers (center and two surrounds) for really great movie and multi channel music palyback.

For now, to get the most bang for your limited buck, I would concentrate on the speakers only and keep the Pioneer receiver. 35 watts per channel is plenty of power if you go with very efficient speakers. For example this RB-61 bookshelf speaker from Klipsch (List $499, probably could get at least 10% or more off from a motivated dealer) has a sensitivity rating (also called efficeincy) of 95dB's. Compare it to the average home speaker at about 89dB's sensitivity. The is means that the average speaker would have to be driven by an amp with 140 watts per channel to reach the same volume levels as the Klipsch RB-61 driven by your Pioneer 35 watt per channel receiver! That's the importance of speaker sensitivity in your situation.

Some audiophiles will talk poorly of horn load speakers but they have several very positive characteristcs: They play very loud for the same power and the have tremendous dynamics. You would match these two speakers up with a good powered sub and have a great sounding system for your limited budget and the groundwork for a 5.1 system. You would need to buy or make a cheap pair of speaker stands.

Now if you don't mind buying online direct from a great company take a look at these speakers from HSU. They have received rave reviews and are such a low price because they are manufactured and sold direct to the end user. They have a sensitivity rating of 92dB's and would play as loud as the average speaker with 70 watts per channel, still plenty for most applications.

HSU is very famous for their superb subs. I highly recommend the system I link below. I myself own speakers, sub and amp for three different online direct companies with excellent results.

http://www.hsuresearch.com/products/hb-1.html

http://www.hsuresearch.com/products/stf-2.html

You have two outstanding sounding horn bookshelf speakers with a very fine sub at $647, a superb price! Another option for the sub is a similar sounding sub form Outlaw Audio (designed with help from Dr. HSU) and a gorgeous inlaid plexiglass top (I own the larger version of this sub). Total price with the HSU HB-1 Mk2 speakers - $697.

http://www.outlawaudio.com/products/lfmcompact.html

RR6