[AV101-2]

Hi all -
I am a complete novice as AV equipment goes and I have recently gone down the Hi Def route and so need to upgrade my sound system as it does not have optical inputs.
Can anyone give me advice on the best kit to buy on a budget of £300-£400.
I have the following kit.
Toshiba 42x3030 TV
Toshiba HD-EP35 DVD player (on order)
Sony DAV-DZ500F Home Cinema
Virgin V+ cable box
Nintendo Wii
Panasonic DMR-HS2 DVD Recorder.

I have not got a clue which Home Cinema system would be best to get for the kit that I already have but it must have Auto calibration and also floor standing speakers.
Would the new kit have to be Hdmi capable or would the HDTv / HD Dvd make up for it?
I have sought of decided on the Sony HTSF1100 (but I am open to other suggestions) is this a good idea?

On a side note I am useless at connecting AV equipment and usually just guess until they seem to work can anyone tell me how to correctly connect the equipment I have.
Many thanks in advance to all.....AJ