I'd have to agree with everybody else - I think you're going to be dissapointed by the musical performance of AV kit compared to what you've already got.
On the DVD-player-as-CD-player issue, for instance, one of Arcam's stated design goals in creating the £1000 DV88 was to make a DVD player that sounded as good with CDs as one of their entry-level CD players. Things may have moved on slightly since then, but I doubt you'll find a DVD player that plays CDs as well as your current CD player unless you spend at least a grand on it, and probably much more.
You might possibly think about a Cyrus AV8 processor (£1100) with your existing amplifiers. I have listened to one of these, but under very much less than ideal circumstances, so I probably ought not to venture too strong an opinion. So far as I could tell it sounded a little thin and brittle compared to a "proper" processor like the Tag McLaren AV32R or Arcam AV8, but then again either one of those would blow your entire budget at a stroke.
If you decide you must have an all-in-one box then the Denon A11SR (which you can pick up for as little as £1260, I believe) is a perceptible step up from cheaper devices. (Good cheaper ones include the soon-to-be-replaced Denon 3802 - a very popular choice - Arcam AVR200, and Sony STR-VA555ES. Some magazine reviewers also like the Onkyo DS696 or Harman-Kardon 5500.) For another step up the Denon A1SR and Pioneer AX10 aren't bad value, but their amplification stages probably still wouldn't be as good as what you have, and (again) they would use up your whole budget at one go.
Speaker-wise you might check out B&W 600 series 3 - the 603s aren't too bad, but are floor-standers, so might still be too big for you. I've read some good reviews of the Mordaunt-Short 500 setup, but can't speak from experience.
If your wife likes small speakers then the Anthony Gallo "Nucleus Micro" speakers are definitely worth a listen. Again, I can't speak from personal experience, but I've read a number of very complimentary postings in these forums.