Upgrading HT..not a first timer but please help?

[Woochifer]

Agree, a blu ray player is already on the to buy list. Should have mentioned that.

When you say you used 301s as surround speakers, do you mean as front speakers or rear speakers?

Rear speakers. Front L/R speakers are referred to as the main speakers.

I think my main concern/question is can I get quality sound for a HT by using small (cube type) speakers or am I going to have to get larger speakers? I assume the law of physics won't allow great sound to come out of such little speakers..even though the wife would love the size of them. If not, I think i may lean towards in wall speakers. By doing that, I could get great quality sound and pass the wife acceptance test. Are there any drawbacks to in wall speakers..besides the fact that once they're installed, they're tough to move?

The simple answer is that you want a speaker that can comfortably extend into the midbass range. Most cube speakers cannot extend into that range, so the manufacturer can make up for that lack of midbass by extending the range of the subwoofer into the midbass or simply leaving a frequency gaps between where the cube leaves off and where the subwoofer takes over.

Either approach is problematic because:

1) If the subwoofer is asked to extend into the midbass, then the sub will be reveal its location and it won't sound too good because subwoofers are optimal for only the lower bass range
2) If you leave frequency gaps, it fundamentally changes how music and other things sound; it's fundamentally inaccurate

Ideally, you want a decent sized bookshelf speaker because those can extend down past 80 Hz (which is the typical crossover frequency for a HT receiver). Below 80 Hz, you will want the subwoofer to assume the bass handling duties. You will only get that with a good set of bookshelf speakers.

In-wall speakers are a compromise because the tonal characteristics are more unpredictable. The physics of a box speaker precisely match the volume of the box with the driver characteristics, and the port diameter (for ported designs). An in-wall speaker does not benefit from this precise balancing act that speaker makers design into their speakers.

If your plasma is in a room with high ambient background light [such as windows] the picture will suck..

Only if the room gets a lot of direct sunlight during most of the day will a plasma not produce enough light output. I use a plasma in a room with a full window covering the length of one wall, and even under those conditions I calibrated it using a reduced brightness setting from the factory defaults. Meeting a calibrated reference spec in a well lit room is well within the capability of a plasma panel. Only if you prefer an extremely bright picture will a plasma be inadequate; and in that case IMO the picture will look like crap no matter what panel type you go with.

A LED display might be a better choice if that's the case..

LED backlighting will increase the contrast and produce a purer light, but it won't produce a higher maximum light output. CCFL backlights will produce light output levels that go well beyond normal viewing range.

Look for one that has a refresh rate of 240 Hz technology if you watch high speed sports

That Samsung plasma TV that the OP is purchasing has a measured motion resolution of over 900 lines, which means minimal blurring with moving backgrounds. LCD TVs need the higher refresh rate to compensate for their lower motion resolution at native display rates.

With 240 Hz TVs, you really have to be careful because most manufacturers don't do a full implementation of the 240 Hz display rate. As far as I know, only Samsung and Sony do the 240 Hz display rate correctly, with both the video processing and display refreshing at 240 Hz. Other manufacturers pair a 120 Hz panel display rate with a 240 Hz scanning backlight, and call it "240 Hz." This design is not much of an improvement over 120 Hz at all, and actually cuts the light output in half, thus negating the most compelling reason to go with LCD.