By that do you mean Audio Return Channel function?
No, I mean that MP3's are usually encoded at 128 to 160 kbps, which is pretty horrible to listen to if you have good speakers. Basically, good speakers are honest, so all of the audio quality that was removed from the music is clearly heard: it usually presents itself as warbling or mushing of sounds that should otherwise be clearly detailed and of good tone. It sometimes can even get a 'from a tin can' sound to it.
A lot of modern receivers and network players have features in them to attempt to restore the songs or at least make them sound better (they all make up their own names for this). It's kind of like up-converting a 480p DVD to HD 1080p, it doesn't actually give you 1080p quality, but it's a lot better than just using a linear scale. The best option is to have your music encoded at a 256kbps bitrate MP3, in FLAC, or in some other lossless format: this is not an option for much of the digital download and streaming content though.
You can think of it this way, a music CD can hold about 700MB worth of music which is 80 minutes long. That same CD encoded into 128kbps MP3s takes up a little over 75MB; that means you have about 625MB or 89% less data. Granted that the raw uncompressed audio on the CD does waste space, you'd still be look at somewhere around 60%-70% degredation from the original quality of the CD. My rule of thumb is that if you have a budget system, 192kbps is the minimum for having it sound almost as good as the CD; 256kbps for entry level hi-fi (I'm talking real hi-fi speakers at $800+/pair); and anything above entry-level (generally 2-3k+/pair) you should keep it lossless (likely FLAC).
I can't really decide right now either I want a 2.0 or 5.1 setup.I need to think about that and evaluate the new options.
It sounds like you ought to get the electronics for a 5.1ch+ system, but only run it in stereo for now. You can always decide to fill out your surround sound speakers later, but this way you will not have wasted money.
Anyhow,I would appreciate if you will post some links with some 2.0 or 5.0\5.1 gear in the 700$-800$ price range.
#1 You absolutely, positively, under every circumstance cannot take someone else's word on sound quality of speakers, pre-amps/processors, and amps. You can listen to their advice and take their opinion into consideration, but you have to go to a local store with a properly set-up listening room and evaluate what kind of sound you like best. Probably one of the biggest examples of this is Bose: Bose purposely distorts the sound reproduction to give it their own "signature". Some people really like it, others (myself included) would prefer to reproduce the sound as precisely as possible to the recording.
#2 If you want to focus on the best quality sound you can get right now and can stretch your budget a bit for the electronics, my best recommendation would be to buy a pair of Ascend Acoustics Sierra-1's. They offer a 30-day money-back audition period. I have yet to hear a better pair of bookshelf speakers than them under $4,000/pair.
#3 Separates are better for processor/amp, but also more costly. If you're looking for the long term, make sure that the amp is rated for 4 ohm as well as you never know what speakers you may choose in the future. To throw around some names: Emotiva, Outlaw Audio, NAD; these will focus on audio quality instead of networking features though.
#4 Is the $800 budget just for receiver/amp? If so, you'll need to go for a receiver with built-in amp unless you already have a pre-amp/processor.
Right now I am looking at the Pioneer VSX-527-K and Yamaha rx-V473 for the 5.1 AV receiver.
As I mentioned before: you really need to listen the speakers you will have hooked up to the receiver you want before making a decision. Some combinations of brands between electronics and speakers just don't get along well and almost all of them will change how it sounds somehow: your ears know best. As a side note, be sure to google whatever models you are thinking about and 'issue' or 'problems' and see what people have run into: there are some issues that make certain electronics very annoying or a pain to work with.
For the 2.0 AMP I was considering Yamaha A-S500.The only downside to this one is that it is not compatible with the Ipad.
The main issue I see here is that you have "treble" and "bass", but no actual equalizer so you won't be able to compensate for room dynamics. The second issue is that you'll need source devices since it's not a receiver/processor with network, internet, or other resources.
One more thing,is it possible to use 4 identical bookshelf speakers and 1 center speaker from the same family to obtain surround sound?
Audiophile surround sound (such as 5.1ch orchestra music, etc) is exactly that: 5 identical speakers plus a subwoofer of the same family. The reason that home theater surround systems tend to have small rear speakers and a long flat center speaker is aesthetics. The one exception is when people use dipole speakers for the rear surround for the affect, which I don't care for. Let's say you bought a pair of Sierra-1s today, then you could add another pair, center, and subwoofer a few years down the road and they will all be in sonic unison (mixing speaker brands and series' tends really muck up the sound).
In fact, Ascend decided to cater to the aesthetics for just that reason (http://www.ascendacoustics.com/pages/products/speakers/SRM1C/srm1c.html
). It's the same speaker, just on its side. Personally, I would only use that if I bought two of them so i could keep the left and right sides balanced.
The moral of the story is that you need to spend some time at the local audio shop's listening rooms before you make a decision. Usually, the people that run such places are flexible and would allow you to bring your own mains to test against some receivers/amps too so long as they're the one handling the display gear.Edited by Electrocutor - 9/15/12 at 6:44pm