(I know this sounds just like one of the many other threads recommending exactly the same products, but they work

)
You might be better off with an
HTSS-1300 or
HTSF-1300 (identical, except that the HTSF has floor-standing speakers and isn't usually available in the UK - Pixmania is a good source though). The
HT-DDWG800 is also a solution, but probably too big for you.
You would probably end up having these connections:
360 <-HDMI-> HTSF-1300
S350 <-HDMI-> HTSF-1300
HTSF-1300 <-HDMI-> TV
Sky+ SD <-component?-> TV
Sky+ SD <-analog RCA?-> HTSF-1300
If you would then upgrade to a Sky HD box, you'd have both HDMI and optical from that to the amp (because Sky HD boxes are odd and won't output surround sound over HDMI).