in the $2k budget i'd look at an onkyo tx-sr805 receiver and b&w 683 speakers. if he doesn't like how the b&w's sound then look at the paradigm monitor line, the 9's specifically.

that would set you up nicely for a 2 channel system, later add a center, then a sub, then surrounds.

$5k budget opens up a whole other realm of possibilities...i think ozzie covers that pretty well.