Advice on New Cinema Surround Sound / AV Receiver & Video Upscaling

[gb5]

Hi,
I am planning to buy a new TV, Blue-ray player & Cinema Surround Sound System. Here is what I had in mind…

1. Sony 40” Bravia LCD TV (KDL-40W4000) - £1270 (Cheapelectricals.co.uk)
2. Sony Blu-ray Disc Player (BDP-S500) - £465 (Cheapelectricals.co.uk)
3. Sony Home Cinema Surround Kit (HT-SF1300) - £315 (Cheapelectricals.co.uk)
4. With Sky HD Box

I’m no expert, so I’ve been doing a bit of reading up recently. This has generated more questions. Wanted to ask someone in the know, rather than some sale bod in a shop.

What I’m concerned about is that the Home Cinema Surround Kit supports video pass through of High Definition 1080p from Blu-ray & HD channels, but doesn’t support video upscaling. Is this going to affect the quality of images/sound from normal DVD disks/non HD channels? Also, there is no support for the new Dolby True HD.

Wasn't sure if the Blu-ray player would upscale the video from standard DVD's & that would simply pass through the AV receiver or not? Also wasn't sure if the Sky box would upscale the standard definition channels & that would simply pass through the AV receiver or not?

I’ve noticed that some AV Receivers support Video Upscaling & True HD, but these tend to be quite expensive. Is it worth spending the extra, or it something that I don’t really need?

Are there any better Home Cinema Kit’s than the one I have in mind? Do the AV receivers offer better quality sound & video than the Home Cinema Kit?

Any advice / recommendations would be most appreciated!!