Well, losing a DSP mode is hardly reason for replacing the entire unit if it works otherwise, especially if you're happy with the audio performance! But, if replacing the unit will give you that much more surround functionality, then it might be worth swapping out, especially if you're already using outboard amps.

If you're happy with Denon, their current model in that general range is the $1,100 AVR-3803, and the next model down from there is the $800 AVR-2803. The 3803 uses some upgraded components in the digital processing section that you may or may not notice. The thing about basic surround decoding is that every receiver with six-channel preouts nowadays will do DD, DTS, 6.1, DPLII, and a lot of other DSP decoding. If you plan on attaching outboard amps, there are plenty of options in the $500 range that will do exactly what you need. By moving up the food chain, you're mainly buying upgrades in the amp section, and maybe some enhancements in the DSP modes, video switching, and multiroom capabilities. With just about any receiver, you'll get a lot of stuff that you won't use. That's just how it is nowadays.

For what you're looking for, I would suggest looking for a closeout model. I believe that Marantz has had the most recent model changeover, so you might want to take a look at them. Denon did a round of upgrades on their midlevel line before the summer, so you won't see any closeouts from them anytime soon.